COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT REPORT Accompanying the document Proposal for a Directive of the European Parliament and of the Council on European cross-border associations

EN EN
EUROPEAN
COMMISSION
Brussels, 5.9.2023
SWD(2023) 293 final
PART 2/2
COMMISSION STAFF WORKING DOCUMENT
IMPACT ASSESSMENT REPORT
Accompanying the document
Proposal for a Directive of the European Parliament and of the Council
on European cross-border associations
{COM(2023) 516 final} - {SEC(2023) 306 final} - {SWD(2023) 292 final} -
{SWD(2023) 294 final}
Offentligt
KOM (2023) 0516 - SWD-dokument
Europaudvalget 2023
84
ANNEX 1
PROCEDURAL INFORMATION
1. Lead DG, Decide Planning/CWP references
The preparation of this file was led by DG Internal Market, Industry, Entrepreneurship and
SMEs (GROW). It was included as the following items in the DECIDE/Agenda Planning
database: PLAN/2022/1465.
2. Organisation and timing
The initiative is a deliverable under the Commission Work Programme 2023 announcing a
Social Economy package (made of binding and non-binding measures to better address the
needs of the Social Economy actors in line with the Social Economy Action Plan of December
2021.
The initiative also follows up the Commission reply of May 2022 to the European Parliament
Resolution adopted on 16 February 20221
.
A Public Consultation and a Call for Evidence were published on 5 August 2022 with a
feedback period until 3 November 2022 2.
The Inter Service Steering Group (ISSG) for the Impact Assessment was set up by the
Secretariat General (SG). It included the following DGs and services: DG BUDG, DG CLIMA,
DG COMM, DG EAC, DG ECFIN, DG EMPL, DG ENER, DG ENV, DG FISMA, DG JUST,
DG NEAR, DG HOME, DG REGIO, DG INTPA, DG ESTAT, DG TAXUD, DG TRADE,
SJ, RTD, JRC, and OLAF.
Meetings were organised as follows: 29 June 2022 (first informal meeting), 7 December 2022,
12 January 2023 and 15 February 2023. Information was also exchanged outside of these
meetings through a dedicated ISSG Teams space.
The ISSG discussed the Call for Evidence and the main milestones in the process including
main stakeholder consultation activities, key deliverables from the support study, and the draft
Impact Assessment report before the submission to the Regulatory Scrutiny Board.
3. Consultation of the RSB
An informal upstream meeting with the Regulatory Scrutiny Board (RSB) took place on 23
January 2023. After final discussion with the Inter-Service Steering Group (ISSG), a draft of
the IA was submitted to the RSB on 1 March 2023 and discussed at a meeting with the RSB
1
Texts adopted - A statute for European cross-border associations and non-profit organisations - Thursday, 17
February 2022 (europa.eu)
2
Single market – Proposal for a legislative initiative on cross-border activities of associations (europa.eu)
85
on 29 March 2023. The RSB issued a negative opinion on 31 March 2023, following which
this Impact Assessment was revised as follows:
RSB Recommendations DG replies
(1) The report should provide evidence (including
stakeholder views) on the existence of the problem. It
should also more precisely define the scale of the
problem to justify better the proportionality of the
initiative and the options considered. Whereas the
report acknowledges the lack or insufficient quality of
data on associations at EU and Member State level, it
should better explain the reasons behind them. It
should be clear on where the data gaps are, and what
assumptions have been made. It should bring to the
report the available qualitative evidence to better
illustrate the magnitude of the problem. The report
should indicate whether and how foresight analysis
has informed the problem definition.
The revised draft report provides further clarifications
on the evidence underpinning this IA, including the
issues of scarcity and data gaps and the stakeholder
input. Such revisions were included in the market
context (Section 1.4) and in the problem analysis
(Section 2), in view of providing a more precise
understanding of the magnitude of the problem, but
also across the draft report and in Annex 4 where
necessary.
Regarding the data gaps in particular, further
clarifications were added in a separate box
introducing the market context (Section 1.4) as well
as in several footnotes across the document
explaining the robustness, background and input for
calculations of estimations and assumptions. Also,
the problem analysis (Section 2) was revised in order
to further assess the problem and to include
quantitative data and bring in new qualitative
elements.
The reach of the consultation activities was clarified
through a more detailed and nuanced presentation of
stakeholders input in Section 2 and in Annex 2,
highlighting that a high proportion of respondents
were umbrella organisations (29 in total),
representing the voice of associations across EU
Member States. The presentation of consultation
activities was split in terms of replies received per
each type of consultation (i.e. public consultation, call
for evidence, survey and interviews), underlying that
the consultation activities overall represented the
voice of approximately 3,026 associations (including
individual associations and umbrella organisations,
either in cases where an association directly
contributed to a consultation activity, or indirectly,
where the contribution was made via the umbrella
organisation the association is a member of).
Regarding foresight analysis, links to several
megatrends and basic foresight elements were added
in the section developing the dynamic baseline
(Section 5).
(2) In view of the Commission’s withdrawn proposal
on a new legal form for associations in 2005, the report
should indicate how conditions have changed. It
should clarify what the main objective of the current
initiative is. It should also better explain, how this
initiative is related to the Social Economy package and
Democracy package.
The revised draft report clarifies in which context the
Commission proposal of 1992 was withdrawn in
2005 and the evolution of the socio-economic context
since then (Section 1.3 and Section 3 of Annex 9).
Furthermore, explanation on how assessed policy
options (as presented in Section 5) differ from the
Commission proposal of 1992 was added in Section
5, particularly underlying differences with the policy
options 1 and 3.
86
The introduction, notably Section 1.2, was revised to
better explain interlinks with other measures included
in the Social Economy Package. Synergies with the
Council Recommendation on social economy
frameworks were better highlighted regarding the
common objective of fostering an enabling
environment for social economy entities, of which
associations are the predominant legal form. The
complementary? with this initiative which underpins
the non-binding nature of the Recommendation has
been also clarified. Furthermore, interlinks and
complementarities between this initiative and the
taxation-related guidance were clarified across the
draft report (notably in sections 1.2 and 2.2).
Granular language to explain the links with the
Defence of Democracy package were introduced in
Section 1.2 (and Annex 9).
Section 5.1.3 was improved by showing a dynamic
baseline to encompass the impacts that the other
initiatives under the Social Economy and Defence of
Democracy packages may have on the current
initiative.
(3) The impacts analysis should clearly explain how
additional employment and Gross Value Added as
well as the number of additional cross-border
associations have been estimated. The report should
improve the description on the robustness of the input
data and assumptions used along various steps of the
analysis. It should clarify how robust the overall
analysis is and if there is a risk of overestimation. If
assumptions are theoretical, this should be recognised.
Different sections across the revised draft report
(Section, 1.4, Section 2, Section 5.1 and Section 6),
as well as parts of annex 4, were improved to explain
the methodology in more detail and clarify the
robustness of the assumptions through the successive
steps towards the estimates presented in the IA:
1) Scoping of the sector in its entirety (total number
of associations, GDP and employment
contributions)
2) Estimation of current cross-border associations
3) Estimation of the number of potential cross-
border associations that can be unlocked given
policy intervention. A more conservative
scenario was added to mitigate potential
overestimations.
4) The uptake of different policy options (impacts)
is estimated starting from the maximum potential
cross border associations (baseline). This
assessment includes further clarification of the
input sources as well as the theoretic estimates
and assumptions made.
For every step taken, a footnote was added
summarising the different steps and caveats (Sections
1.4, 2, 5.1 and 6). The risk of overestimation for some
estimates was explicitly highlighted in the
appropriate sections (Sections 2 and 6). To overcome
this (i) a more conservative scenario was added to the
assessment and (ii) a range was applied to the uptake
percentages (a 10 p.p. margin).
(4) The report should explore a more targeted and
possibly more proportionate variant of the option
establishing EU-level legal form of association, based
on a ‘European association’ only set up for cross-
A variant of PO1, “PO1b” (a ‘European association’
only set up for cross-border activities), was
introduced, assessed and compared with other policy
options (Sections 5, 6, 7). Relevant differences
87
border activities, while the rest remains under Member
State law. The report should present the costs and
benefits of all relevant options, paying sufficient
attention to transposition, implementation and
enforcement aspects, including issues of legal clarity,
risks of fragmentation and divergent interpretation. In
this context, the report should also clarify the
implications of the choice of the type of legal delivery
instrument i.e. Directive or Regulation, and how this
would impact the effectiveness, efficiency and
coherence of the options.
between PO1a and PO1b were assessed qualitatively
in a separate section added to section 6.1 on impact
analysis for PO1. Aspects related to implementation
and enforcement of each policy option were clarified,
as well as related to the choice of legal instrument
(Sections 5-8).
Furthermore, Sections 5 and 6 were specifically
clarified and improved concerning the introduction,
application and explanation of the impacts on the
different policy options and impacts in terms of cost
and benefits (e.g. baseline development, a second
scenario added to the baseline and ranges were
applied for impacts in terms of benefits). The
consequent main methodological steps were included
into the report via footnotes across the document.
(5) The comparison of options should present a
comprehensive and consistent narrative to explain how
options compare. The scoring methodology needs to
be better explained and should be fully consistent with
the preceding impact analysis. The report should better
explain the choice of the preferred option taking into
account the assessment of the options’ scores on
effectiveness, efficiency and proportionality. It should
explain the discrepancy between the efficiency and
proportionality assessment on the one hand and the
large differences in the proportionality scores on the
other hand.
The comparison of policy options was revised,
including clarifying better the scoring methodology
(Section 7). The assessment of proportionality was
deepened, while other areas of the comparison were
clarified and made more nuanced (Section 7-8) and
more consistent with impact analysis of section 6.
The choice of the preferred option was better justified
(Section 8). As there is very little harmonization in
the Union concerning association law and there is a
history of an unsuccessful attempt to create a
European Association at EU level, the need for
proportionality in the envisaged preferred option is
underscored (Section 8).
Some more technical comments have been sent
directly to the author DG.
Clarifications and improvements have been provided
in the introduction to better explain the focus of the
initiative and the entities falling in its scope (a new
figure 1 was added and relevant footnotes were
revised). More clarity on terminology was provided
to differentiate the legal form of association (in scope
of this initiative) from legal forms outside of the
scope of the initiative as well as links with legal
statuses or qualifications an association could acquire
(see Introduction and Glossary). Clarifications
regarding the legal basis and its choice brought in
Section 3.
Links with the relevant SDGs were also added in
Section 1 in line with Section 7.
All RSB comments regarding presentation and
terminology have been addressed.
In addition to Annexes 2, 4 and 9 mentioned above,
further clarifications and updates were also provided
in Annexes such as 3, 4, 5, 6, 7, 8, 10, 11, 12, 13 and
14.
The executive summary has been revised to reflect all
changes made to the IA report and Annexes.
A revised version of the draft Impact Assessment was resubmitted to the RSB on 8/05/2023.
The RSB delivered a positive opinion (with reservations) on 8/06/2023, following which this
Impact Assessment was revised as follows:
88
RSB Recommendations DG replies
(B) Summary of findings
(1) The report does not explain why options with
different legal bases are presented.
The revised draft includes additional elements of
clarification to explain the choice of different legal
bases as most appropriate for the different policy
options. Replies in point (C ) below specify in detail
the revisions made.
(2) The report is not sufficiently clear on the
difference in impacts of the policy options, in
particular those resulting from the choice of legal
instruments. The comparison of options does not
sufficiently differentiate proportionality from
subsidiarity aspects.
The revised draft includes additional elements to
clarify (i) the difference of impacts among the policy
options, in particular those resulting from the choice
of legal instruments and (ii) the comparison of the
options with regard to proportionality and
subsidiarity. Replies in point (C ) below specify in
detail the revisions made.
(C) What to improve
(1) The report should be clear which legal basis fits
best with the problems at stake. It should better explain
why for the policy options establishing an EU legal
form via a regulation Article 352 TFEU is the
appropriate legal basis, whereas for options using the
delivery instrument of a directive Article 114 TFEU is
chosen. Given the non-profit character of the
associations in scope of the initiative, the single market
dimension should be better justified.
In section 3.1, new elements related to the activities
of the associations in the single market have been
added to justify the adequacy of Article 114 TFEU as
the appropriate legal basis, in light of associations’
potential capacity to perform economic activities and
send/receive capital in the single market.
Additionally, in section 5.2.1 and 5.2.3, the difference
between PO1b and PO3 has been explained in a more
granular manner to better reflect the difference in the
choice of the legal basis. More precisely, it is
explained that PO1b has an ‘exhaustive’ approach
harmonising cross-border aspects at EU level, while
PO3 limits its action to an approximation of laws
between Member States in the said cross-border area.
(2) The report should be clearer on the differences in
impacts between the policy option that fully prescribes
an EU level legal form (PO1a) and the option (PO1b)
that limits 2 EU action to cross-border aspects. It
should better explain why the presented cost estimates
do not differ. In this respect, it should better explain
why it is assumed that the uptake would be similar
even though the options have different scopes. It
should consider using some estimates (e.g. economic
benefits) from the analysis of option PO3 (additional
national legal form), given that PO1b and PO3
essentially regulate the same cross-border aspects.
Parts in section 6.1.5 are revised in order to better
articulate the differences of impacts between PO1a,
PO1b and PO3. More precisely, the differences and
similarities in terms of cost-benefits between PO3
and PO1b are further developed, as well as further
elements in terms of subsidiarity and proportionality
are added (p. 59).
Also section 7 is updated with relevant elements in
this regard, mainly in the section on subsidiarity and
proportionality (p. 74-75).
(3) The comparison of options should provide a more
granular analysis, so that the differences between the
options in terms of effectiveness and efficiency come
out in a clearer and more detailed manner, including in
the comparison table. The comparison of efficiency,
including in terms of Benefit-Cost-Ratios, should be
informed by more quantitative information. The
scoring methodology used for comparing the options
should be explained, in particular, given the similar
scoring among the options.
Several improvements have been added clarifying the
differences in terms of effectiveness and efficiency in
section 7.
The scoring methodology is overall explained in
more granularity and the scoring was adapted
accordingly, as explained in point (4) below. An
explanatory footnote is added to the table header
“Efficiency (cost/benefit ratio)” explaining the
conversion of monetary values of table 13 to the +/_
assessment in table 14. This should make clear that
the differences in launch costs for PO1 and PO3 are
non-significant in the overall sum of excess cost
reductions, and consequently justify an equal scoring
89
for cost/benefit ratio between PO1 and PO3 (p.70-
73).
The available quantitative information and
consequent assessments made are integrated in the
efficiency section, further supporting the qualitative
assessment.
(4) The report should clearly differentiate the
assessment of options on proportionality from the one
on subsidiarity, including in the comparison table. On
subsidiarity, the report should better explain the
different scoring between the option creating the
European cross-border association (PO1b) and the one
creating an additional national legal form of
association designed for a cross-border membership
and/or cross-border purposes or activities (PO3) given
that both options seem to prescribe at EU level the
same cross-border aspects. The scores in the
comparison summary table should be adapted
accordingly.
The assessment of the differences of the policy
options in terms of proportionality and subsidiarity in
section 7 has been divided in two parts: one
concerning proportionality and another concerning
subsidiarity. The comparison table (Table 14) has
therefore been updated accordingly by adding a new
row especially dedicated to the scoring of the
subsidiarity of each policy option. The scoring of the
proportionality of each policy option in Table 14 has
also been updated to reflect the new assessment
(p.74-75).
Furthermore, although not part of the 2nd
opinion of the Board, updates have been provided in
the IA in the context of the Social Economy package and Democracy package (IA report
section 1, Annex 9).
The comments formulated by the Board have been duly addressed and integrated in the final
version of the Impact Assessment, stemming both from the first and second opinion of the
RSB.
4. Evidence, sources and quality
To support the analysis of the different options, the European Commission awarded a contract
for a support study to external experts Capgemini (consortium lead), Ecorys and a legal
advisory panel and network of legal experts [GROW/G2 964/PP/GRO/SME/22/13215 under
FWC GROW/2021/OP/0001]. These experts worked in close cooperation with the European
Commission throughout the different phases of the study.
The Impact Assessment further relies on the information received from consultation activities
as detailed in the synopsis report contained in Annex 2 of this Impact Assessment.
In addition, this Impact Assessment has been supported through further evidence and analysis
stemming from the study on Comparative legal analysis of associations laws and regimes in
the EU,3
published on 29.09.22 and a recent independent study on comparative analysis on
merger rules for associations4
(to be published in Q2 2023).
3
Corporate author(s): Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs
(European Commission), RAS Institute.
4
Corporate author(s): Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (European
Commission), RAS Institute
90
ANNEX 2
STAKEHOLDER CONSULTATION (SYNOPSIS REPORT)
Table of Contents
1. Introduction ..............................................................................................................................86
2. Public consultation and call for evidence .................................................................................88
2.1. Feedback from the Call for Evidence ........................................................................................88
2.2. Feedback from the Open Public Consultation ..........................................................................89
2.2.1. Information on respondents.............................................................................................89
2.2.2. General summary of the results of the Open Public Consultation ...................................90
3. Targeted stakeholder consultation...........................................................................................93
3.1. Cross-border associations.........................................................................................................94
3.2. Associations active in only one Member State.........................................................................95
3.3. Academia and research centres................................................................................................95
3.4. Service providers (Companies) .................................................................................................95
3.5. Competent authorities..............................................................................................................95
4. Interviews..................................................................................................................................96
4.1. Associations acting in several Member States:.........................................................................96
4.2. Associations acting in a single Member State...........................................................................97
4.3. View on policy options:.............................................................................................................98
4.4. Academia and research centres................................................................................................98
4.5. Competent authorities..............................................................................................................98
5. Commission Expert Group on Social Economy and Social Entrepreneurship (GECES Group)..99
91
1. INTRODUCTION
The impact assessment underpinning the legislative initiative on cross-border activities of
associations in the single market included a consultation process that covered a variety of
different consultation activities aiming at gathering the views of relevant stakeholders, and in
particular: associations, other Non-Profit Organisations (NPOs), EU citizens engaging in
associations and other NPO activities, Member States and public authorities, businesses,
experts, and researchers in non-profit law. The aim was to ensure that the views from different
organisations and stakeholder types were presented and considered.
Overall, the consultation activities included a Call for Evidence (50 replies received), a Public
Consultation (64 replies)5
, a targeted consultation (i.e. an online survey) and 64 interviews
which were carried out to further enhance the evidence base and support the preparation of the
policy options.
The aim was to improve the understanding of the problem described in section 2 and those
obstacles encountered by associations in the single market. The targeted groups of the online
survey consisted of domestic and cross-border associations (88 in total), service providers (in
total 12), academia/research institutes (in total 14), competent authorities (in total 11). The
interviews (in total 64) targeted associations and umbrella organizations of associations.
While the return across the consultation activities was generally limited, the level of
representativeness of contributions is worth noting, especially through the involvement of
umbrella organisations, which were consulted and represented the voice of a much broader
number of associations.
Across the above-mentioned consultation activities (i.e. Call for Evidence, Public Consultation,
targeted survey and interviews), 29 umbrella organisations were reached out to and
represented the voice of 3 026 individual associations, either in cases where an association
directly contributed to a consultation activity, or indirectly, where the contribution was made
via the umbrella organisation the association is a member of. The table below show the break-
down of the consultation activities with regard to associations’ consultation in the context of
this IA.
5
Single market – Proposal for a legislative initiative on cross-border activities of associations (europa.eu)
92
Table 1: Overview of represented associations in all consultation activities
* This number includes the voice of association provided either in cases where an association directly contributed to a consultation activity, or indirectly, where the contribution
was made via the umbrella organisation the association is a member of.
6
This numbers takes into account all categories of stakeholders that were reached out to for the consultation activity mentioned.
7
This numbers takes into account all categories of stakeholders that provided an answer to the consultation activity mentioned.
8
The associations counted in this section may have already been counted as members of umbrella organisations. However, it is considered that the two contributions should be
counted separately as the content of the contributions differs by its content and nuances.
9
This number takes into account both scoping and in-depth interviews conducted throughout the IA study.
Consultation
activity
Number of stakeholders
that were reached
out to6
Of which were
associations
Replies
received7
Of which are
associations
Total number of
individual
associations
represented in
the
consultation
activity *
Number of
associations
having provided
an input under
their own
authority8
Umbrella organisations
participated in the
consultation activities
(representing x n. of
associations)
Call for
Evidence
N/A N/A 50 replies 42 1 841 26 16 1 815
Public
Consultation
N/A N/A 64 replies 38 1 958 25 13 1 933
Targeted survey 2 491 1 700 140 replies 88 2 115 73 15 2 042
Interviews 146 93 64 replies9
41 1 840 23 18 1 817
93
Although there is no guarantee that the view conveyed by the umbrella organisations is
supported in every respect by every member represented by the 29 umbrella organisations
across the consultation activities, the way of gathering the views of their members can be
potentially regarded as a mitigation measure, taking into account the possibility to channel their
position through the shared platform that umbrella organisations represent10
.
In addition to the activities mentioned above, the Commission informed and discussed
regularly with the members of the GECES (Expert group on social economy and social
enterprises (2018-2024)11
on the initiative on cross-border activities of associations.
The stakeholder consultation activities fed into the process of determining and defining the
magnitude of the problem.
This synopsis report presents a summary of these consultation activities and their results.
2. PUBLIC CONSULTATION AND CALL FOR EVIDENCE
The Public Consultation and a Call for Evidence were accessible to the public (in all EU
languages) for 12 weeks (i.e. from 5 August 2022 until 3 November 2022).
2.1.Feedback from the Call for Evidence
In total, 50 responses were submitted, most of which were provided by NGOs (29- 58%)
followed by business associations (7-14%), Other (5- 10%) EU Citizens (5-10%), Company
business (2 - 4%), Academic Research Institution (1- 2%) and one Trade Union (1- 2%). 25
positions papers were submitted.
The majority of stakeholders (e.g. NGOs/ Business Associations/Other) welcomed the
European Commission initiative to strengthen the cross-border activities of associations and
supported an intervention at policy level. A large part among stakeholders did not specify a
preferred policy option.
Across stakeholders, some also asked for the initiative to cover all NPOs including foundations
for the purpose of creating an enabling environment that respects the diversity of social
economy organisations.
Restrictions faced:
The majority of stakeholders (with no big differences between the stakeholder groups) reported
recurrent challenges and obstacles when conducting cross-border activities with issues such as:
• Providing services in another Member State without registration
• Visibility barriers/ recognition in another Member State
• Access to funding
• Different VAT regimes and approaches in different EU countries
10
When it comes to input provided by umbrella organisations, it is worth noting that it builds on the assumption
that, during the consultation activities, umbrella organisations stay in close contact with their members on any
issues of importance and of relevance to their activities as the support and views of their members is essential for
their functioning.
11
An overview of members and the minutes are accessible via the Commission webpage: Expert groups
(europa.eu)
94
Some stakeholders also stressed difficulties in employing staff across Member States, which
required permanent establishment in those Member States, and it might result in a
disproportionately high and duplicated tax burdens.
Creation of a European Public Benefit/Non-Profit
Across the stakeholder groups, many advocate for creating a public-benefit legal form via EU
law, based on common public-benefit criteria, which would enable these new national entities
to be recognised in other Member States jurisdictions by mutual recognition.
2.2.Feedback from the Open Public Consultation
2.2.1. Information on respondents
In total, 64 responses were obtained during the public consultation and 18 position papers. One
respondent, with the legal form of association, submitted a formal position paper, which was
endorsed by 20 other organisations. In addition, two position papers were received outside of
the EU Survey.
Among the respondents, 47% were non-governmental organisations (NGOs) (30 out of 64),
followed by an 16% classified as Other category12
(10 out of 64), and 14% as a business
association (9 out of 64), 9% as EU citizens (6 out of 64), 6% as Trade Unions (5 out of 64),
two (3%) as company/business organisations and two 3% as public authorities13.
According to the results, 67% of all respondents were part of the Non-profit sector. Among the
respondents who were part of the non-profit sector, 59% (38 out of 64) respondents defined
themselves under the legal form of association14
.
Regarding the countries of operations, 22% of respondents have activities in several EU
Member States (14 out of 64), 33% of respondents replied in one Member State (21 out of 64),
and 20% of respondents replied, in EU Member States and non-EU countries (13 out of 64).15
Among 38 the Associations, 26% indicated to have operations in several EU Member States
(10 out of 38), 37% in one Member State (14 out of 38), and 34% in EU Member States and
non-EU countries (13 out of 38).
12
Four out of 10 respondents in this category defined themselves as “Public Organisation”, and four as
“Association” whereas the remaining two respondents did not provide further details.
13
Estonia and Denmark.
14
As indicated in the questionnaire, for the purpose of the public consultation the following definition of
association applies: “Association” refers to the legal form of associations or charities that are membership-
based organizations of persons created for a specific purpose, usually for an indefinite period of time and
having their own legal personality. They are established for a purpose other than sharing the potential profits
from an economic activity, which leads to the qualification of “non-profit”.
15
16 respondents did not answer this question. This question was only asked to respondents who completed the
questionnaire on behalf of an organisation and indicated that they were a business association,
consumer/business organisation, consumer organisation, environmental organisation, non-governmental
organisation or trade union.
95
2.2.2. General summary of the results of the Open Public
Consultation16
Operating cross-border
Majority of the respondents (58%) strongly agreed that for reaching the objectives of an
association, it is necessary to be able to easily operate across different Member States/cross-
border in the EU Single Market”.
The most important needs for associations that operate or want to operate in more than one
Member State are the provision of services in another Member State without registration (24%
- 48 out of 64), followed by getting equal tax treatment for donors in case of cross-border
donation (18% - 36 out of 64). (The answers do not differentiate among respondent type)
Figure 1: Most important needs for associations operating or willing to operate in more than one Member State.
Restrictions faced by associations
58% of the respondents agreed that “an association registered in an EU Member State
currently faces restrictions when seeking to operate in another EU Member State.
16
For the complete Factual Summary Report on the Public Consultation: Have your say (europa.eu)
96
Figure 2: Restrictions identified by the different stakeholder groups when associations engage in activities across
borders.
When asked which restrictions respondents see as most dissuasive, the following topics are the
most recurrent ones17
: Tax related issues (12 out of 44 replies), registration process (9 out of
44 replies), and administrative formalities (6 out of 44 replies).
Figure 3 provides an overview of the replies (answer options: yes, no, no opinion/don`t know)
from the 64 respondents to three of the questions in the questionnaire.
17 Open text question.
97
Figure 3: Overview of replies to three of the questions from the questionnaire.
Need for EU Action
As regards ways to mitigate the identified restrictions, most respondents (73% - 47 out of 64)
agreed that there is a “need for policy action at EU level” to mitigate restrictions encountered
by associations either when currently operating in several Member States or planning to do
so.
76% (29 out of 38) of the respondents who defined themselves under the legal form of
association, agreed with the need for EU policy action and only two respondents (5% - two
out of 38) disagreed. 69% (18 out of 26) of the respondents with other forms of establishment
(i.e., other than associations) also agreed that policy action is needed at EU level.
Preferred policy option
Figure 3 depicts the respondents’ preferred choice among the envisaged policy options18
.
Among the policy options, for 36% (22 out of 64) a preferred policy option would be a new
legal form for associations, 42% (26 out of 64) of respondents indicated the harmonisation of
common minimum standards for cross-border operations in the EU, whereas 15% (nine out of
64) of respondents opted for an EU information campaign and 7% (four out of 64) of
respondents chose other options.19
Among the 38 respondents who defined themselves under the legal form of association, 42%
(16 out of 38) favoured a new legal form for associations (option 1), 32% respondents (12 out
of 38) chose the harmonisation of some common minimum standards (option 2), and 18%
respondents (seven out of 38) showed support for an EU information campaign (option 3). The
distribution of the respondents with other forms of establishment (i.e. other than associations)
18
Multiple responses were allowed.
19
The results on policy sub-options are not included given the response rate was not representative.
98
was slightly different, with 54% respondents (14 out of 26) preferring Option 2, 23%
respondents (six out of 26) Option 1 and 8% respondents (nine out of 26) Option 3.
Figure 4: Preferred policy options.
3. TARGETED STAKEHOLDER CONSULTATION
A targeted survey covered four stakeholder groups; cross-border associations; single-country
associations; companies (service providers); competent authorities and academic entities
(academia, research institutes). A tailored survey questionnaire was created for each of the
stakeholder groups. The online survey was open from 12 December 2022 and eventually closed
21 February 2023 to allow for a thorough analysis to be performed in order to inform IA study.
Table 2: Targeted consultation – Survey: Stakeholders overview
Type of organisation Number contacted Answers received
Associations active in one
MS
1700 45
Associations active in
several MS
43
Academia/Research
institutes
75 15
Companies 649 12
Competent authorities Every MS 11
Others 15
Total 140
As indicated in Table 2, only 88 associations filled in the questionnaire. This low response rate
can be attributed to numerous factors. To begin with, the survey ran during the holiday period,
which may have limited the ability of associations to participate in the consultation.
In addition, from a capacity point of view, it may be more difficult to reach an association and
to obtain its views. Associations have a relatively smaller number of employees who cover
99
more than one responsibility.20
In a smaller structure, the capacity can be rather limited when
it comes to allocating resources to answering surveys and questionnaires and many of them
mentioned they had received a significant number of requests for surveys and questionnaires.
The objective of the survey was to gather the views from the listed stakeholder groups with a
higher degree of detail in comparison to the Open Public Consultation. As part of this Survey,
a tailored questionnaire was developed, focusing on barriers to working cross-border and
relevant costs.
3.1.Cross-border associations
Out of the 45 associations active cross-border, 16 indicated to have encountered difficulties
with establishing, registering, and/or continues running of operations cross-border. Table 2
illustrates the countries in which 13 associations acting cross border faced barriers for their
cross-border activities; 3 other associations also indicated to have encountered barriers they
had encountered but did not specify a particular Member State. Not only was Belgium
mentioned most frequent to the questions where problems were encountered, it was also named
as the country posing most difficulties for the associations active in multiple countries cross-
border (4 out of 13 respondents – 31%). It should however be put into perspective with the fact
that a large part of the sample of associations are interested in establishing themselves in
Brussels due to the proximity to the European Institutions, which may have given the study
more material to study on Belgian procedures and related difficulties.
Member states Answers
Austria 1
Belgium 7
France 1
Germany 4
Hungary 3
Italy 3
Romania 2
Spain 3
Table 3: Response to: “Please list the Member State(s) where you experienced difficulties with establishing,
registering, and/or the continued running of your operations.”
The most often mentioned highly or extremely bothersome types of barriers faced by
associations acting in several EU Member States (13 associations replied) when engaging in
activities across borders are: different set of national rules for establishing associations (7 out
of 13 – 54%), followed by difficulties merging associations across different EU Member States
(5 out of 13 – 38%), different rules on tax exemptions for associations across the EU Member
States (4 out of 13 – 31%), different rules on tax exemptions for public benefit or associations
with a similar status across the EU Member States (4 out of 13 – 31%), different rules on
taxation (e.g., VAT) and tax reporting between the EU Member States (5 out of 13 – 38%),
different rules on audits between Member States (5 out of 13 – 38%), different rules on
reporting requirements between Member States (5 out of 13 – 38%), different rules on receiving
20 For example, many associations have a structure in which one person can be in charge of legal, finance,
operations, HR, and administration while other employees would also cover multiple roles such as member
acquisition, board management, external communications, and event organisation.
100
private and public donations for associations or their donors across the EU Member States (4
out of 13 – 31%), difficulties/ discrimination of donations from other EU Member States (4 out
of 13 – 31%), difficulties in accessing finance/ financial support in the target EU Member State
(4 out of 13 – 31%), difficulties in opening bank accounts/ transferring money between the EU
Member States (4 out of 13 – 31%).
3.2.Associations active in only one Member State
8 out of 42 associations active in only one country considered expanding operations to another
Member State. The disincentives to carry out these operations were quite like the ones listed
by cross-border associations with the addition of a majority identifying the following additional
issues as highly bothersome or extremely bothersome: different set of national rules on what
defines an association and/or the types of activities an association is allowed by law to carry
out (4 out of 8 – 50%), different set of national rules on running an association (e.g., reporting
requirements, necessary bodies such as management board, rules for decision-making, etc.) (4
out of 8 – 50%), additional layer of obligations or rules for associations from another EU
Member State, including limitations to fundamental rights activities (4 out of 8 – 50%),
difficulties admitting members from another EU Member State, including board members (3
out of 8 – 38%).
3.3.Academia and research centres
In total 14 academia and research centres participated in the survey. When asked about the
barriers to cross-border activities of associations they identified the following as being the most
highly or extremely burdensome for associations engaging in cross-border activities: Different
set of national rules for establishing associations (6 out of 14 – 43%), different set of national
rules on what defines an association and/or the types of activities an association is allowed by
law to carry out (6 out of 14 – 43%), difficulties merging associations across different EU
Member States, including transfer of seat (6 out of 14 – 43%), difficulties converting
associations across borders between different EU Member States (7 out of 14 – 50%), different
rules on tax exemptions for associations across the EU Member States (6 out of 14 – 43%),
different rules on tax exemptions for public benefit or associations with a similar status across
the EU Member States (6 out of 14 – 43%), different rules on taxation (e.g., VAT) and tax
reporting between the EU Member States (5 out of 14 – 36%), difficulties in accessing finance/
financial support in the target EU Member State (4 out of 14 – 29%), different rules on
donations for associations or their donors across the EU Member States (4 out of 14 – 29%),
difficulties in opening bank accounts/ transferring money between the EU Member States (4
out of 14 – 29%), lack of contacts in the target country (2 out of 14– 14%), different civil
society cultures across EU Member States (2 out of 14 – 14%).
3.4.Service providers (Companies)
The 12 service providers that participated in the survey indicated the main barriers for
associations for cross-border activities as following: the fact that associations were often
treated as companies in the single market (2 out of 8 – 25%), complex employment conditions
in cross-border situations (1 out of 8 – 12,5%), disincentivizing donation framework for
companies (1 out of 8 – 12,5%).
3.5.Competent authorities
The 11 competent authorities (i.e. BE, HR, IT, DK, FI, CY, FR, HR, LV)21
that provided
answers to the survey were not asked about existing barriers, but rather provided feedback on
21 Two different bodies provided information for BE, FI and DK.
101
the specific numbers related to employed FTE’s, number of registered entities etc. Their view
on the barriers were later elaborated in the interviews that followed.
4. INTERVIEWS
Interviews were conducted with 64 parties, mainly umbrella organisations and individual
associations, namely: 8 umbrella organisations of associations during the scoping phase,
and 33 associations during the interview phase (22 of which were individual associations,
and 11 were umbrella organisations).22
4.1.Associations acting in several Member States:
The 18 associations acting in several Member States that participated in the interview
highlighted the following aspects as the most burdensome:
The complexity of dealing with the different national legislations (5 out of 18). The following
specific points on that aspect were mentioned:
- Requirement of translation of the statute into national language
- Different set of rules at national levels are recurring issues
- Hungary: Difficulties in pursuing certain activities, e.g., migration. Further monitoring and
inspections imposed from the State
- Understanding national legislation
- Administration costs
Regarding “taxation system”: The complexity of taxation system depending on the host
countries and the requirements implied by the various systems (5 out of 18). The following
specific points on that aspect were mentioned:
- “There are subsequent checks, and all revenues will be examined and could be considered
taxable”
- “It is very complex to run a pan-European organization across Europe if the fiscal possibilities or
incentives to operate in certain places are not the same”
- “It is not possible nowadays to make a single tax declaration when you receive donations from
different countries. MS rules are different across EU. AISBL in Belgium, 3 categories for NPOs in
Italy and as many in other MS, no mutual recognition. Opening a new office would entail
opening a new tax debt”
- “There are tax exemptions in the Netherlands, but not in Lithuania, and this creates
discrepancies”
- “Understanding the situation of other countries is often really complex, we have a diverse staff
and the question of residency, double taxation, social security etc. is a real issue we are face
with on a daily basis as an entity acting on a European level”
- “The most important barrier to be named is the VAT one. When we are using services abroad,
we have to pay for VAT but as we are not VAT subject, we cannot claim it back”
22
Number of umbrella organisations at the interview stage showcased in Table 1 is 18, since one of the umbrella
organisations (GEANT) took part in both scoping and in-depth interviews.
102
Regarding the complexity of uneven accessibility of funding, both from the European Union
and the Member States themselves (4 out of 18). The following specific points on that aspect
were mentioned:
- “It is difficult receiving donations from other countries and accessing public procurement. Every
single MS has their own rules which is really difficult”
- According to one association, between 30% and 50% of the money they receive can disappear
in tax.
- “The criteria given by the Commission to get relevant subsidies are very hard to reach for small
entities”, one interviewed association considers that associations that are not in Brussels or/and
of sufficient importance do not benefit of enough contacts, and once a subsidy application is
out, they do not have the capacity to react quickly enough.
- “This is also one of the reason that shared administration at the border is so hard to have: shared
public money is a complex topic”
Compliance complexity related to banks for associations (3 out of 18), with comments added:
- “As an association it is not a real problem to open a bank account. But banks today have to
conduct thorough checks and if someone is absent (President) it becomes very complicated”
- “Banking services can be difficult to access to all NPOs in NL, acting cross-border or not”
The important difference of perception of civic society in the EU (3 out of 18). The following
specific points on that aspect were mentioned:
- “There is a real barrier of education on sensitive topics depending on the Member State”
- “Difficulties can lie in the language and cultural differences with regards to social economy”
- “There is a historical side in Eastern countries where associations are seen as relics of the old
communist regimes, and therefore civil society is less fostered because of that”
- “Associations are highly dependent on the goodwill of Member States”
4.2.Associations acting in a single Member State
The following aspects were raised as most burdensome:
- “Registration” – In some cases, e.g., Italy, necessary to register with two ministries.
- Legal expertise needed for setting up new status complying with national legislation.
- Difficulties in setting up in order to receive tax-exempt status.
The complexity of the taxation system depending on the host countries and the requirements
implied by the various systems (4 out of 15). The following specific points on that aspect were
mentioned:
- “Donor associations are asked to register in Portugal”
- “The different rules are really complex; the double taxation can happen very quickly if you are
considered as having a permanent establishment”
- “There is an obligation to register in a country (here Spain) if you want to have a regular activity
in it even if they don’t specially want a privileged status”
103
The complexity and uneven accessibility of funding, from the European Union and the Member
States themselves or donations (7 out of 15). The following specific points on that aspect were
mentioned:
- Fundraising issues. Registration is sometimes a precondition for receiving funds.
- Difficulties in ensuring foreign government funding if registered in another MS.
- “We receive around 1 grant a year, while the ones based in Brussels receive around 10 so it
would make a large difference if we were to move. There is a discrepancy in the EU funding
based on where your associations are located”
Compliance complexity related to banks for associations (6 out of 15). The following specific
points on that aspect were mentioned:
- “The reporting behind donations received is very heavy even for very small amounts”
- Opening and closing bank accounts is difficult.
- “In the Netherlands, it is very hard to open a bank account and all the time you wait is time
when you don’t get any funding”
- “Setting up another account was difficult because we had to amend and go through all the
processes of doing so. This could have affected their cashflow if we hadn’t had the necessary
funds already”
4.3.View on policy options:
Regarding these associations both acting in a single state and cross-border view on the policy
options described in the IA Study, most associations agreed on the fact that the one that would
be most likely to have impacts is the regulation, as recommendations or directives are,
according to this group, subject to interpretation of the Member States which could be an issue.
Nevertheless, the different perception of the matter at hand led a number of associations to also
consider the enhanced cooperation as a valid option as this would allow countries with a will
to act to start the harmonisation process; even though that would also imply, according to some
associations, that problematic areas probably would not be addressed.
Regarding the policy options, it was highlighted by most that while the regulation would be the
preferable approach, its feasibility was an issue. Thus, the most supported option in this case
was the directive that would allow more flexibility and have more chance to have an impact in
the end. However, it was stressed that the scope of the options was not precise enough yet.
4.4.Academia and research centres
Matters raised by the five academia and research centres interviewed were the following:
- “Access to public funding is more burdensome for foreign associations and small
associations”
- “There is a lack of predictability of resources”
Compliance complexity:
- Opening bank accounts (2 out of 5 respondents)
- Reporting differences in perception of civic society: (3 out of 5 respondents).
4.5.Competent authorities
Interviews were conducted with the following Member States: BE, BG, CY, DK, FI, FR, DE, LV,
LT, SE. While no particular barrier was raised by the interviewed competent authorities, views
104
on the policy options were shared. Overall, authorities tended to favour the option that would
lead to the least changes in their own legislation. This approach was motivated by the large
number of consultations that would have to be done in parallel to the changes.
5. COMMISSION EXPERT GROUP ON SOCIAL ECONOMY AND SOCIAL
ENTREPRENEURSHIP (GECES GROUP23)
Meeting of 25 January 2022, relevant points raised during the discussion:
An expert mentioned the obstacles in the cross-border operations for philanthropy and
foundations and asked how this could be tackled at EU level. The Commission replied that it
had launched two studies and expected results in the first half of 2022. One aimed to map the
rules across Member States when it comes to philanthropy to assess their diversity. The second
study was on the cross-border obstacles for associations and non-profit entities.24
Meeting of 15 June 2022, relevant points raised during the discussion:
Following a question on how the European Commission intends to follow-up of the EP
resolution of February 2022 with recommendations to the Commission on a statute for
European cross-border associations and non-profit organisations,25
DG GROW confirmed that
the related open consultation, including the call for evidence, will be launched by July 2022.
An expert expressed thanks for the update on the EP JURI report26
, which was considered as a
game-changer for the civil society, including the philanthropic sector. The expert confirmed
that their association looks forward to the announced public consultation and will gather
experts on the matter in order to be able to contribute.
Meeting of 14 November 2022, relevant points raised during the discussion:
The experts welcomed the initiative and the announced actions on the cross-border activities
of associations, but asked if the wider NPOs sector, including not only associations but also
foundations, would be covered in the new legislative initiative as a follow-up of the European
Parliament resolution of February 2022. For instance, it was highlighted a barrier related
taxation, and more concretely the implementation of the non-discrimination principle within
the EU. An expert asked if there will be guidance for Member States on how to best implement
the non-discrimination principle in taxation in the context of cross-border donations as
announced in the Action Plan for the Social Economy of December 202
23
Expert groups (europa.eu)
24
Comparative legal analysis of associations laws and regimes in the EU - Publications Office of the EU
(europa.eu)
25
PR_INL (europa.eu)
26
MEPs push for game-changer rules for pan-European civil society | News | European Parliament (europa.eu)
105
ANNEX 3
WHO IS AFFECTED AND HOW?
1. Practical implications of the initiative
The preferred option (i.e. “Create an additional legal form of association designed for cross-
border purposes (“cross-border association”), based on mutual recognition” would generate the
cost and benefits as summarised in the table below.
At this point in time, it is only possible to give a rough idea about the nature of the costs and
benefits and it has to be kept in mind that these are dependent on concrete modalities of
implementation by competent authorities and on a series of decisions made by associations,
that makes is unpredictable to estimate the exact number of associations wishing to opt to
spread across borders (see Annex 4). Having said that, this Annex tries to provide an overview
of the main consequences in terms of cost-benefits for the concerned stakeholders (e.g.
associations operating cross-border in the single market) that are likely to stem from the
preferred option.
Who will be affected? This annex will focus on:
• Associations:
o those operating cross-border activities
o those potentially operating cross-border activities
o those not interested to operate cross-border.
• Member States (who have to transpose and set up registries etc.)
Indirectly, citizens (benefiting from more associations going cross border, either as members
of associations or recipients of the associations’ services) and for-profit companies (potentially
experiencing more competition from more associations operating cross-border) could be
affected. For more elaboration on these indirect impacts, see overview table in Annex 4.
2. Summary of costs and benefits
I. Overview of Benefits – Preferred option
Description Amount Comments
Direct benefits
Associations: recurrent
administrative and
compliance cost
reduction.
Excess cost reduction (against
baseline) of:
• Compliance cost (internal):
EUR 190 million
• Information cost (internal):
EUR 350 million
• Direct cost/ External
advisory cost (External
running cost): EUR 230m
The preferred policy option has
the potential to reduce costs of
operation for those associations
using it and thus simplifying
gathering information,
compliance and needs for regular
external advisory support.
It is not likely to expect such
effect to materialise from year 1,
and in particular:
106
This leads to a total cost reduction
of EUR 770 million / year. Over
a time span of 15 years, the
estimate total cost reduction is of
EUR 8.5 billion
- a lag effect of 1 year is
included (where no effects
can be observed), due to the
time to effectively implement
the appropriate policy
intervention and produce the
desired effects on relevant
stakeholders (e.g. introduction
into national law).
- starting from year 1, it can
be expected a linear increase
from the current situation to
the full cost reduction
potential (i.e. EUR 770
million per year) until year 5.
- as of year 5, the policy
intervention can be expected
to be fully effective and to
produce the maximum
expected results.
Associations: estimated
reduction for launching
operations
Excess cost reduction (against
baseline):
• Internal setup cost
(compliance cost): EUR 1 500
• External advisory cost (direct
cost): EUR 650
• Total: EUR 2 150 per
launch
Applying this cost estimate to the
number of new associations that
are expected to launch cross
border operations under this
policy option, the excess cost
reduction amounts to:
Scenario A: EUR 338 million –
EUR 378 million27
Scenario B: EUR 283 million –
EUR 317 million
(within the assessed 15 years time
frame).
A key benefit of the preferred
policy option is that it might lead
to a lesser need to fully establish
in other Member States and even
if the requirements would be
largely the same. This affects all
components, from internal setup
costs to external advisory needs
and information gathering costs.
Compared to the operation costs,
the setup costs will only affect
new cross-border (potential
estimated) associations and will
not affect the existing ones.28
27
With central estimate EUR 358 million, applied to the OIOO.
28
Unless those would develop new operations.
107
Indirect economic benefits
Unleash new cross-
border associations in the
single market
Estimated new number of
additional cross-border
associations range between
157 000 – 176 000 for scenario A
and 132 000 – 147 000 for
scenario B for the next 15 years,
through e.g. new access to
markets (including public
procurement), scaling of services
provision and better access to
research and innovation, etc.
These are generated by the
reduction of barriers to entry
(reduction of cost and
administrative burden) and
consequent better access to new
markets within the single market.
Starting from the baseline
scenario (A), it is estimated that
in case of “no intervention” to
unlock any of this potential, the
opportunity cost will exist
throughout the full duration of
these 15 years leading to a total
of:
• 185 000 associations not
deciding to expand cross
border
• 75 000 jobs not being created
and
• Annual contributions to GDP
of EUR 4.2 bn not being
made.
•
A scenario (B) is added
anticipating a possible
overestimation of the opportunity
costs above (based on a 10 p.p.
lower scenario) starting from:
• 155 000 associations not
deciding to expand cross
border
• 63 000 jobs not being created.
• an annual contributions to
GDP of EUR 3.4 billion not
being made
Generation of additional
(annual) GDP
Estimated increase in GDP ranges
between EUR 3.57 billion –
EUR 4 billion for scenario A and
EUR 3 billion – EUR 3.3 billion
for scenario B.
Generation of additional
employment
Resulting in additional
employment (FTE) ranging
between 64 000 – 71 000 for
scenario A and 54 000 – 60 000
for scenario B.29
Guaranteeing a level
playing field and
Not Quantifiable.
29
Figures for both scenario’s A and B based on a policy uptake range between 85% and 95%. This range
corresponds to a central estimate 90% uptake of the policy intervention as suggested by the IA study based
on targeted survey and in-depth interviews, as well as legal analysis
108
assurance of operation
across the Single market
Administrative cost savings related to the ‘one in, one out’ approach
(direct/indirect) Excess cost reduction (against
baseline) of:
• Compliance cost (internal):
EUR 190 million
• Information cost (internal):
EUR 350 million
• Direct cost/External
advisory cost (External
running cost): EUR 230
million
This leads to a total cost reduction
of EUR 770 million / year. Over
a time span of 15 years, the
estimate total cost reduction is of
EUR 8.5 billion
Excess cost reduction (against
baseline):
• Internal setup cost
(compliance cost): EUR 1 500
• External advisory cost (direct
cost): EUR 650
• Total: EUR 2 150 excess cost
reduction per launch
The preferred policy option has
the potential to reduce costs of
operation for those associations
using it and thus simplifying
gathering information,
compliance and needs for regular
external advisory support.
It is not likely to expect such
effect to materialise from year 1,
and in particular:
- a lag effect of 1 year is
included (where no effects can be
observed), due to the time to
effectively implement the
appropriate policy intervention
and produce the desired effects on
relevant stakeholders (e.g.
introduction into national law).
- starting from year 1, it can
be expected a linear increase from
the current situation to the full
cost reduction potential (i.e.
EUR 770 million per year) until
year 5.
- as of year 5, the policy
intervention can be expected to be
fully effective and to produce the
maximum expected results.
A key benefit of the preferred
policy option is that it might lead
to a lesser need to fully establish
in other Member States and even
if the requirements would be
largely the same. This affects all
components, from internal setup
costs to external advisory needs
and information gathering costs.
Compared to the operation costs,
the setup costs will only affect
new cross-border (potential
estimated) associations and will
not affect the existing ones.
109
Adjustment cost n/a There will be a need for
adjustment (one-off) for the
associations taking the new legal
form. These have however not
emerged to be significant in the
analysis (IA study).
3. Impact on Member States:
Changes in the legal framework may cause costs of adjustment and costs of
compliance/administrative burden for competent authorities depending on the magnitude
of these changes. In the case of this initiative, these impacts largely depend on (i) the extent of
adaptation of existing procedures for the recognition of legal personality and for registration,
(ii) the number of future registrations for cross-border associations and (iii) information costs,
when comparing the baseline with the policy options and specific changes brought by each
policy option.
Associations operating across-borders generally need to re-establish/register in the Member
States in which they expand, depending on the scope of their activities. Policy preferred policy
option (PO3) is expected to reduce this necessity and will consequently reduce the burden on
public authorities in the long run. In the short term, this policy option will require competent
authorities to familiarise themselves with the new framework.
Considering one-off costs for adapting registration procedures and registers, costs depend
on the need for adaptation of current registers or for setting up a new register. Member States
will be responsible for the registration of the new legal form. The intention is to leave Member
States the flexibility whether to adapt existing registers or establish new ones, as well as
requiring Member States to offer the option of online registration.
As detailed in the IA study and Annex 10, 24 EU Member States already have dedicated
registers in place. Member States without a dedicated register (Sweden, Denmark and
Ireland), may decide to set-up a dedicated register for cross-border associations or adapt
existing registers e.g. used for associations. For instance, in Denmark, associations must
register with the Danish Business Authority to obtain a unique ‘cvr-number’ if they conduct
commercial activities or wish to obtain public subsidies. Similarly, the same practice takes
place in Sweden for non-profit associations. This means that also in countries where no
association-specific register is established, mechanisms exist already to allow associations to
register. Consequently, also for these Member States, the obligation to register the new legal
forms is likely to have non-significant costs.
To conclude that legislative changes imply minor adjustments, including adding a separate
section or entry to the existing registers. Similar initiatives30
have shown that on average to
EUR 100 000 per Member State in additional one-off costs could be expected. Consequently,
this is not deemed to be particularly burdensome, since once this adjustment is implemented,
30
Impact assessment to modify Directives 2009/102/EC and (EU) 2017/1132: https://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=SWD:2023:0178:FIN:EN:PDF
110
the public authority is expected to return to its business as usual. Hence, no significant
additional annual running costs can be expected.
In cases where registers need to be established (Ireland, Denmark and Sweden), converted or
a new “registration line” should be created in an existing register, it is anyhow recommendable
to promote digital registers, as a 2017 study shows that "e-procedures” could reduce costs by
yearly EUR 19 million for cross-border businesses and EUR 810 million for domestic
businesses. Moreover, research has shown that digital registration processes are less subject to
fraud because of harmonised safeguards on electronic identification. As shown by the Danish
conversion towards digital business registers: between 2011-2015 the average time for case
handling decreased by 69% and the average ramp-up time for a new employee decreased by
90%.31
To make an estimation of costs of online registration (assuming a register already exists), an
indication can be offered by the assessed costs for setting up an online registration possibility
for limited liability companies.32
For Member States the set-up costs for such an online
registration tool varied from EUR 42 000 in Ireland to EUR 100 000 in Poland, or around
EUR 120 000 in Latvia.33
In the short to medium term, competent authorities may be required
to invest in acquisition of such tools and adjust processes including training of staff.
Considering annual maintenance for digital registries in Member States are found to be non-
significant.34
Consequently, the European Commission may encourage interoperability of national
registers with an EU level platform/portal either to be established or building on existing
initiatives, such as the Single Digital Gateway to allow for automated data access and
exchange, and/or the use of agreed (minimum) standards to ensure comparability of data.
Finally, and considering the elements mentioned above, in the short-term35
non-significant
adaptation costs may occur for competent authorities. PO3 is also expected to reduce in the
31
European Commerce Registers' Forum report, 2017, p. 45 and 56, as referred to in the Commission SWD:
Impact Assessment - Proposal for a Directive of the European Parliament and of the Council amending
Directive (EU) 2017/1132 as regards the use of digital tools and processes in company law, p. 17.
32
It is to be noted that all MS already provide for electronic business registers since 2007 following a requirement
introduced into EU law at the time. Directive 2003/58/EC of the European Parliament and of the Council of
15 July 2003 amending Council Directive 68/151/EEC, as regards disclosure requirements in respect of
certain types of companies, OJ L 221, 4.9.2003, p. 13
33
Commission SWD: Impact Assessment - Proposal for a Directive of the European Parliament and of the Council
amending Directive (EU) 2017/1132 as regards the use of digital tools and processes in company law. A DK
government position paper addressed to the DK Parliament regarding the same proposal estimates that
changes in the Danish Business Authority’s IT systems, are estimated at DKK 2 million
(approx. EUR 270 000).
34
As indicated by a Danish Government position paper assessing the costs of maintenance for the Central
Business Register (CVR), estimating EUR 40 000 on annual basis in relation to implementing Directive
COM/2018/239.
35
Short term adaptation costs (one-off) are found to be as non-significant by the IA study. E.g. most Member
States have already have a (digital) register for associations or register associations in more generic registers
(e.g. NL) and have already acceptance and monitoring procedures in place that can be adapted with minimum
costs. DK, IE and SE do not have a register for associations. In the case of DK associations are required to
111
long run recurrent costs for competent authorities related to compliance and monitoring of
cross-border activities and mobility of associations (such as for the creation of legal
personality, registration, merger, monitoring, informing associations and establishment
procedure costs). Significant extra costs are not expected for competent authorities, as the
volume of operations will be either similar to the already existing procedures or even lighter as
more simplified (and digitalised) procedures will be in place for cross-border associations and
overall, less registrations will be needed.
II. Overview of costs – Preferred option
Citizens/Consumers Businesses (Associations) Administrations (Member
State)
One-off Recurrent One-off Recurrent One-off Recurrent
Action
(a)
Direct
adjustment
costs
None None
Associations can voluntarily
convert to the new legal
form. There will be no costs
for the associations that don’t
want to take the new legal
form (no adjustment and no
administrative costs).
The costs for those that take
the new legal form will be
depending on the extent
harmonisation differs from
national rules (old form
versus the new legal form)
and are expected to be not
significantly different from
the former legal form.
Neither targeted survey, nor
in-depth interviews indicated
that associations expect
significant cost related to
direct administration impacts
based on any of the policy
options.
Adaptation of
existing
register:
EUR 100 000.
Expected costs
to offer online
registration
option (IT tool)
vary between
EUR 40 000
and
EUR 120 000.
NA
Direct
administrative
costs
None None
Direct
regulatory fees
and charges
None None
No
significant
effect,
(average
registration
fee = EUR 60
).36
None N.A.
register in the Central Business Register (CVR), which collects primary data on businesses in Denmark
regardless of economic and organizational structure, including associations under certain cases. In the case of
SE, non-profit associations are required to register in the Swedish Companies Register, if they conduct
commercial business activity, exceed certain thresholds in terms of number of employees, balance sheet total
and net turnover.
36 See also Section 8.1 of the IA.
112
Direct
enforcement
costs
None None N.A. N.A.
N.A.
Depending on
registration
requirements
differs from
existing
national rules.
Neither
targeted
survey, nor in-
depth
interviews
indicated that
competent
authorities
expect
significant
cost impacts
related to
enforcement
based on any
of the policy
options.
Indirect costs None None
N.A.
Neither
targeted
survey, nor
in-depth
interviews
indicated
that
competent
authorities
expect
significant
cost impacts
related to
enforcement
based on
any of the
policy
options.
Costs related to the ‘one in, one out’ approach
Total
Direct
adjustment
costs
None None None
Indirect
adjustment
costs
None None
Administrative
costs (for
offsetting)
None None
4. Relevant sustainable development goals
III. Overview of relevant Sustainable Development Goals – Preferred Option(s)
Relevant SDG Expected progress towards the Goal Comments
SDG 8: Decent work and
economic growth
New jobs created including better
conditions), better access to economic
opportunities.
SDG 16: Peace, justice
and strong institutions
Strengthened civil society through
guaranteeing of operations of associations
including those protecting fundamental
rights.
SDG 3: healthy lives
and promote well-being
for all
Indirectly supportive by facilitating cross-
border activities of associations mainly
active in sectors such as health, care and
social services.
113
ANNEX 4
METHODOLOGICAL ANNEX
Table of Contents
1. Introduction ............................................................................................................. 109
2. Methodology for socio-economic impacts ....................................................................... 110
2.1. Overall number of NPOs and associations...................................................................... 110
2.2. Economic value added of associations............................................................................ 120
2.3. Employment ............................................................................................................. 122
2.4. Sectors of activity ...................................................................................................... 124
2.5. Number of cross border associations ............................................................................. 134
2.6. Number of FTEs on cross-border activities .................................................................... 136
2.7. GDP generated by cross-border activities ...................................................................... 136
2.8. Size of NPOs and associations (SMEs and large associations) ............................................ 140
3. Methodology to assess the baseline scenario ................................................................... 142
3.1. Dynamic baseline....................................................................................................... 142
3.2. Potential cross-border associations and their unlocked potential........................................ 143
3.3. Costs of launching and running cross-border operations .................................................. 147
3.4. Costs of operating cross-border.................................................................................... 154
4. Impacts of policy options............................................................................................. 156
4.1. Identification of potential impacts ................................................................................ 156
4.2. Selection of expected impacts....................................................................................... 157
4.3. Qualitative assessment of impacts intensity .................................................................... 159
4.4. Quantification of expected significant impacts ................................................................ 159
4.5. Validation of estimates and discussion of results ............................................................. 160
114
1. Introduction
This methodological annex provides further information on the assumptions made and data used to
make calculations in the scope of the IA. Therefore, this annex is mostly based on the supporting IA
study and follows to great extend its structure. It first presents the methodology for the socio-economic
impacts, followed by the methodologies for assessing the baseline scenario and the impacts of the policy
options.
Note that this file provides the background for the calculations presented in the main body of the IA
study and the IA itself. It does not repeat sources and data points cited and discussed in the main report,
unless these have been used for the calculations.
115
2. Methodology for socio-economic impacts
Many Member States provide data on either association themselves or on non-profit organisations in
general. However, as no consistent definition, reporting and collection of data at EU level exist, most
numbers used in the report stem from national sources. Where possible, the IA and the IA study relies
on data from official sources, such as the national statistical bureaus, other authorities as well as
previous research performed on the topic.
It's important to note that here are no clear-cut statistics on the number of existing non-profit
organisations across the EU-27. Information is not collected consistently neither by Eurostat nor by
national statistical bureaus. In addition, the definition of associations and thus the scope of the term and
the type of organisations captured differ across countries. As a consequence, exact numbers that provide
a breakdown of NPOs or even associations per year, on their value added, employment data, and other
economic metrices are difficult to come by, especially for the EU-27. In many instances, it is necessary
to rely on incomplete or somewhat outdated data.
There are, therefore, uncertainties regarding the statistics illustrating the economic impact of
associations. Where needed, theoretic assumptions had to be applied based on comparable sources,
interventions, and effects. Those are explained in this annex as well as in the IA via a summary of the
steps followed (as also explained in the relevant footnotes in the IA). Nevertheless, the trends, data
ranges and best estimates presented and developed here help to draw a clear and approximate picture
of the economic impact of associations across the Member States.
The objective was to quantify the number and economic impact of associations across Europe in order
to more precisely define the scale of the problem. However, these data points are not always available.
At times, the Section also relies on data for the third sector and NPO sector, concepts that are wider
than associations, including notably also other entities such as foundations, cooperatives, and social
enterprises. While some of the numbers and estimates might be inflated, it is noteworthy (as is shown
below), that associations usually account for the largest share of NPOs across countries (usually in a
range between 80% and more than 90%). Therefore, the data points available for NPOs overall can be
seen as proxy for data for associations, albeit very likely overestimating the true situation for
associations. Nevertheless, these data points provide valuable intuition on the value added of and
employment by associations across the EU-27.
2.1.Overall number of NPOs and associations
Available Data
For many Member States, data on either NPOs and/ or associations are available. However, as no
consistent definition, reporting and collection of data at EU level exist, most numbers used in the IA
study stem from national sources. Where possible, the IA study relies on data from official sources,
such as the national statistical bureaus, other authorities as well as previous research performed on the
topic.
The table below reports available data on the number of NPOs and associations per Member State,
where available. In total, it was possible to identify relevant data for almost all Member States. For each
data point, the table also provides information on the year the data stems from and mentions the
respective source.
116
Table 1: Overview of available data points for NPOs and associations, by country.
Country
Number of
NPOs Year
Number of
associations Year
Belgium 150 247 2018 140 188 2022
Bulgaria 18 305 2010
Czechia 132 953 2018 126 661 2022
Denmark* 100 000 2020
Germany 674 452 2022 615 759 2022
Estonia 45 873 2022 43 149 2021
Ireland 34 331 2021
Greece 7 190 2018 4 671
Spain 273 497 2007 264 851 2007
France 1 500 000 2020 1 300 000 2020
Croatia* 52 973 2017 52 731 2022
Italy 363 499 2022 309 723 2022
Cyprus 3 046 2022
Latvia* 24 367 2021 22 834 2021
Lithuania 35 000 2020 7 087 2022
Luxembourg 8 377 2021
Hungary 61 034 2021 38 412 2021
Malta 1 854 2021 1 780 2021
Netherlands 256 829 2022 128 553 2022
Austria 130 162 2022
Poland 95 200 2020 66 800 2020
Portugal 71 885 2017 66 761 2017
Romania 46 430 2020
Slovenia 27 593 2023 24 375 2023
Slovakia 71 486 2020 50 575 2020
Finland* 110 632 2022 108 032 2022
117
Country
Number of
NPOs Year
Number of
associations Year
Sweden 206 506 2020 161 843 2020
Table 2: Sources of the data points presented in the table above.
Country Sources
Belgium
https://www.brusselstimes.com/48241/graydon-finds-that-belgian-charities-have-significant-reserves-but-fail-to-invest-sufficiently;https://media.kbs-
frb.be/fr/media/10179/zoom_barometre_associations_FR_2022
Bulgaria
https://static1.squarespace.com/static/5650290ee4b093974a0327c5/t/5656c9b0e4b09e258543013e/1448528303999/Sozialwirtschaft+i+d++EU+2012%2
81%29.pdf
Czechia
https://eu-russia-csf.org/wp-content/uploads/2019/04/190327_RU-
EU_Report2018_allpages.pdf;https://www.ohchr.org/sites/default/files/Documents/AboutUs/CivilSociety/ReportHC/states/46_CzechRepublic.doc
Denmark*
https://www.europarl.europa.eu/RegData/etudes/STUD/2021/662630/EPRS_STU(2021)662630_EN.pdf;https://op.europa.eu/en/publication-detail/-
/publication/21adb612-42cb-11ed-92ed-01aa75ed71a1
Germany https://www.ziviz.de/sites/ziv/files/vereine_in_deutschland_2022.pdf;https://www.ziviz.de/sites/ziv/files/vereine_in_deutschland_2022.pdf
Estonia
https://www.stat.ee/en/find-statistics/statistics-theme/economy/economic-
units;https://andmed.stat.ee/en/stat/majandus__majandusuksused__kasumitaotluseta-uksused/ER041/table/tableViewLayout2
Ireland https://benefactslegacy.ie/wp-content/uploads/2022/03/benefacts-nonprofit-sector-analysis-2021.pdf
Greece https://eu-russia-csf.org/wp-content/uploads/2019/04/190327_RU-EU_Report2018_allpages.pdf;Country fiche
Spain https://ec.europa.eu/citizenship/pdf/national_report_es_en.pdf;https://ec.europa.eu/citizenship/pdf/national_report_es_en.pdf
France
https://institutfrancaisdumondeassociatif.org/en/french-institute-for-non-profit-
organisations/;https://www.insee.fr/fr/statistiques/5365639?sommaire=5371421
Croatia*
https://www.researchgate.net/publication/344349882_The_Institutional_Settings_of_the_Recovery_of_the_NGO_Sector_in_Post-
Communist_Countries;https://registri.uprava.hr/#!udruge
Italy https://www.istat.it/it/files//2022/10/REPORT-NON-PROFIT-2022.pdf;https://www.istat.it/it/files//2022/10/REPORT-NON-PROFIT-2022.pdf
Cyprus http://www.moi.gov.cy/moi/moi.nsf/pagede1b_gr/pagede1b_gr?OpenDocument
Latvia*
https://nvo.lv/uploads/research_on_the_sector_of_civil_society_organizations_in_latvia_2020202456.pdf;https://nvo.lv/uploads/research_on_the_sector_
of_civil_society_organizations_in_latvia_2020202456.pdf
Lithuania
https://fra.europa.eu/sites/default/files/fra_uploads/franet_lithuania_civic_space_2021.pdf;https://osp.stat.gov.lt/statistiniu-rodikliu-
analize?hash=4c919020-9559-4fcd-a7ab-8f6e68e1cd9e#/
Luxembourg rapport_amif_6_f_vrier_2023_version_finale.pdf (elsevierpure.com)
118
Country Sources
Hungary
https://www.ksh.hu/stadat_files/gsz/hu/gsz0014.html;
https://www.ksh.hu/stadat_files/gsz/hu/gsz0069.html;https://www.ksh.hu/stadat_files/gsz/hu/gsz0014.html;
https://www.ksh.hu/stadat_files/gsz/hu/gsz0069.html
Malta https://op.europa.eu/en/publication-detail/-/publication/21adb612-42cb-11ed-92ed-01aa75ed71a1;Country fiche
Netherlands Country fiche
Austria Country fiche
Poland
https://stat.gov.pl/obszary-tematyczne/gospodarka-spoleczna-wolontariat/gospodarka-spoleczna-trzeci-sektor/dzialalnosc-stowarzyszen-i-podobnych-
organizacji-spolecznych-fundacji-spolecznych-podmiotow-wyznaniowych-oraz-samorzadu-gospodarczego-i-zawodowego-w-2020-r-wyniki-
wstepne,3,9.html;https://stat.gov.pl/obszary-tematyczne/gospodarka-spoleczna-wolontariat/gospodarka-spoleczna-trzeci-sektor/dzialalnosc-
stowarzyszen-i-podobnych-organizacji-spolecznych-fundacji-spolecznych-podmiotow-wyznaniowych-oraz-samorzadu-gospodarczego-i-zawodowego-w-
2020-r-wyniki-wstepne,3,9.html
Portugal
https://www.cases.pt/wp-content/uploads/2019/07/19ContaSatEconSocial_2016ENG.pdf;https://www.cases.pt/wp-
content/uploads/2019/07/19ContaSatEconSocial_2016ENG.pdf
Romania https://op.europa.eu/en/publication-detail/-/publication/21adb612-42cb-11ed-92ed-01aa75ed71a1
Slovenia https://www.cnvos.si/en/ngo-sector-slovenia/;https://www.cnvos.si/en/ngo-sector-slovenia/
Slovakia
https://datacube.statistics.sk/#!/view/sk/VBD_SLOVSTAT/ns2003rs/v_ns2003rs_00_00_00_en;https://datacube.statistics.sk/#!/view/sk/VBD_SLOVST
AT/ns2003rs/v_ns2003rs_00_00_00_en
Finland* https://www.prh.fi/en/yhdistysrekisteri/statistics/numberofassociationsandreligiouscommunities.html
Sweden
https://www.scb.se/en/finding-statistics/statistics-by-subject-area/business-activities/structure-of-the-business-sector/the-civil-
society/;https://www.scb.se/en/finding-statistics/statistics-by-subject-area/business-activities/structure-of-the-business-sector/the-civil-society/
Note that for some countries (marked with an asterix), the number of NPOs was calculated using information on different types of NPOs, most notably disaggregated data on
associations and foundations. These data points most likely underestimate the true number in said countries to some degree, as some forms of NPOs might be omitted from the
calculations (due to lack of data).
119
Using Eurostat data on the population in 2022, the number of NPOs and associations can be expressed
per capita for the Member States for which data are available.
Table 3: NPOs and associations per inhabitant, based on 2022 population data from Eurostat.
Country
Population
(2022)
NPOs per
inhabitant Associations per inhabitant
Belgium 11 631 136 0.013 0.012
Bulgaria 6 838 937 0.003
Czechia 10 516 707 0.013 0.012
Denmark 5 873 420 0.017
Germany 83 237 124 0.008 0.007
Estonia 1 331 796 0.034 0.032
Ireland 5 060 005 0.007
Greece 10 603 810 0.001 0.0004
Spain 47 432 805 0.006 0.006
France 67 842 582 0.022 0.019
Croatia 3 879 074 0.014 0.014
Italy 58 983 122 0.006 0.005
Cyprus 904 705 0.003
Latvia 1 875 757 0.013 0.012
Lithuania 2 805 998 0.012 0.003
Luxembourg 645 397 0.013
Hungary 9 689 010 0.006 0.004
Malta 520 971 0.004 0.003
Netherlands 17 590 672 0.015 0.007
Austria 8 978 929 0.014
Poland 37 654 247 0.003 0.002
Portugal 10 352 042 0.007 0.006
Romania 19 038 098 0.002
Slovenia 2 107 180 0.013 0.012
Slovakia 5 434 712 0.013 0.009
Finland 5 548 241 0.020 0.019
Sweden 10 452 326 0.020 0.015
Another relevant metric is the share of associations among all NPOs. The table below reports these
shares where data are available.
Table 4: Associations as share of NPOs, for Member States where sufficient data are available.
Country Share of associations
Belgium 93.3%
Bulgaria
Czechia 95.3%
Denmark
Germany 91.3%
Estonia 94.1%
120
Country Share of associations
Ireland
Greece 65.0%
Spain 96.8%
France 86.7%
Croatia 99.5%
Italy 85.2%
Cyprus
Latvia 93.7%
Lithuania 20.2%
Luxembourg
Hungary 62.9%
Malta 96.0%
Netherlands 50.1%
Austria
Poland 70.2%
Portugal 92.9%
Romania
Slovenia 88.3%
Slovakia 70.7%
Finland 97.6%
Sweden 78.4%
Weighted average 86.8%
Building on this, it is also possible to derive a weighted average, factoring in the relative weight of the
countries in the number of associations overall. The weighted average is calculated as follows:
𝑊𝑒𝑖𝑔ℎ𝑡𝑒𝑑 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 =
∑ 𝑆𝐶𝐴𝐶
∑ 𝐴𝐶
Where S is the share of association for country C, and A is the number of associations for country C.
This yields a weighted average of 86.8%, suggesting that associations account for the largest share of
NPOs overall.
Estimating missing data points for Member States
To estimate missing values, the following techniques were employed:
• To calculate the total number of NPOs, and where the number of associations is available,
the weighted average is used to yield the total number of NPOs. For this, the number of
associations is divided by the average weight. This technique has been used for Bulgaria,
Denmark, Cyprus, Austria, and Romania (marked with * in the table below).
• To calculate the number of associations for Ireland the weighted average share of associations
among NPOs is used to calculate the likely number of associations.
The estimation techniques yielded the following results.
Table 5: Complete overview of the number of NPOs and associations by country, data gaps closed by
extrapolation.
121
Country Number of NPOs Country Number of associations
Belgium 150 247 Belgium 140 188
Bulgaria* 21 100 Bulgaria 18 305
Czechia 132 953 Czechia 126 661
Denmark* 115 200 Denmark 100 000
Germany 674 452 Germany 615 759
Estonia 45 873 Estonia 43 149
Ireland 34 331 Ireland 29 801
Greece 7 190 Greece 4 671
Spain 273 497 Spain 264 851
France 1 500 000 France 1 300 000
Croatia 52 973 Croatia 52 731
Italy 363 499 Italy 309 723
Cyprus* 3 500 Cyprus 3 046
Latvia 24 367 Latvia 22 834
Lithuania 35 000 Lithuania 7 087
Luxembourg* 9 700 Luxembourg 8 377
Hungary 61 034 Hungary 38 412
Malta 1 854 Malta 1 780
Netherlands 256 829 Netherlands 128 553
Austria* 149 900 Austria 130 162
Poland 95 200 Poland 66 800
Portugal 71 885 Portugal 66 761
Romania* 53 500 Romania 46 430
Slovenia 27 593 Slovenia 24 375
Slovakia 71 486 Slovakia 50 575
Finland 110 632 Finland 108 032
Sweden 206 506 Sweden 16 843
For the EU, this implies the following estimates, applying a range of 3% (these 3% represent
approximately the average growth rate of the number of associations across six years, see below) as
lower and upper bound estimates.
Table 6: Overall estimates of the number of NPOs and associations in the EU-27.
Lower
bound
Central
estimate
Upper
bound
NPOs 4 500 000 4 600 000 4 700 000
Associations 3 800 000 3 870 000 4 000 000
Discussion on the data
The data presented on the number of associations can be considered very robust. To the largest
extent, data stems from most recent official sources (between 2020 – 2023)37
. It is thus likely to draw
37
Except for BG (2007) and Spain (2010).
122
an accurate picture of the overall number of associations in the EU-27. Yet, when interpreting the data,
a few qualifications need to be made:
• Data for Spain (numbers from 2007) and Bulgaria (2010) are outdated. However, jointly, the
two countries account for approx. 7% of all associations only.38
. Therefore, the overall data for
the EU-27 provide a clear intuition and very good understanding of the state of play across
countries. They further provide a robust basis for the following estimations and calculations, as
the difference between the actual number of associations and the number reported is likely to
be relatively small.
• The differences in national definitions, registration, and frequency of the maintenance of
potential registries or databases requires attention when comparing the data. The data points
reported represent the number of associations as they are understood in their national context,
which differs among the EU-27. In addition, some countries reports highlight the potential
under-registration or lack of up to date and accurate database (e.g. Greece).
• The data has been compared and amended, where useful, with the results from the recent study
“Comparative legal analysis of associations laws and regimes in the EU (European
Commission, 2022).39
The data identified by the previous study is mostly in line with the data
identified for this report. Note that where it was possible to identify more recent data, these
have been included in the analysis for the IA study. Furthermore, it was possible in the IA study
to close some data gaps and update numbers for several Member States of previous studies by
extensive desk research.
Development over time
Overall, the number of associations appears to have increased over time. For example, statistics indicate
that the annual growth in the number of associations amounted to 2.8% in France between 2011 and
2017.40
The detailed data table further below provides the yearly numbers of associations for eight
countries between 2009 and 2022, representing almost one third of all associations. For example, in
Germany, the number of associations increased by about 45 000 entities between 2009 and 2022,
representing an increase of about 8% across this time period. Over the same period of time, the number
of associations increased by about 100% in Slovakia, while slightly decreasing in Hungary and staying
more or less the same in Poland and Sweden. Using 2020 as a base year, the development over time can
be compared visually as well, as presented in the figure below.
Figure 1: Development of the number of associations for selected Member States.
38
For all but 3 countries, data available for associations stems from 2020 to 2023. The variation in the estimate
by applying a growth rate would not lead to a change in the rounded central estimate that is used for further
analysis.
39
https://op.europa.eu/en/publication-detail/-/publication/21adb612-42cb-11ed-92ed-01aa75ed71a1.
40
https://www.associations.gouv.fr/IMG/pdf/tchernonog_associations_fcc_2018.pdf.
123
Source: See tables below
The table below provides some estimates for annualised growth in the number of associations in more
recent years. The weighted average of the values below (using the relative share of associations as
weight) yields an annual growth rate of 0.4%. Depending on the availability of data, the three-year total
and annual growth has been calculated for the eight countries explored. The data suggest that in recent
years, the growth rate for associations might have slowed down. For example, a recent report for
Germany notes that it is likely that in the coming years, the number of associations might actually
decrease.41
Therefore the IA study uses a 0 growth %.
Table 7: Recent total and annual growth in the number of associations for eight Member States.
Country 2017/18 2020/2021 Total growth Annual growth (2017/18 to 2020)
Germany 605 911 613 594 1.3% 0.4%
Estonia 39 305 42 122 7.2% 2.4%
Hungary 34 579 34 811 0.7% 0.2%
Poland 69 100 66 800 -3.3% -1.1%
Slovenia 23 272 22 793 -2.1% -0.7%
Slovakia 45 938 50 575 10.1% 3.4%
Finland* 106 318 107 898 1.5% 0.7%
Sweden 165 798 161 843 -2.4% -0.8%
*Data for 2019 is used
41
https://www.ziviz.de/sites/ziv/files/vereine_in_deutschland_2022.pdf.
50
60
70
80
90
100
110
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Development of the number of associations, 2020 = 100
Germany Estonia Hungary Poland
Slovenia Slovakia Finland Sweden
124
Table 8: Time series data of the number of associations for eight Member States.
Country 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Germany 570 374 576 357 582 339 588 368 591 759 630 143 598 210 602 602 605 911 610 720 613 594 615 759
Estonia 26 679 28 303 29 507 28 183 28 376 29 439 30 859 30 948 26 857 39 305 40 044 41 141 42 122 43 149
Hungary 35 743 35 042 35 549 35 583 35 396 35 192 34 484 34 470 34 742 34 579 34 284 34 340 34 811
Poland 67 900 69 500 72 000 73 400 69 100 66 800
Slovenia 20 417 23 529 23 272 23 204 23 146 22 793
Slovakia 25 460 26 991 28 648 28 205 31 989 33 894 36 041 40 386 43 544 45 938 48 206 50 575
Finland 106 318 106 879 107 898 108 032
Sweden 144 827 149 001 152 800 156 845 161 370 165 798 159 298 161 843
Table 9: Sources of the time series data presented above.
Country Source
Germany https://www.ziviz.de/sites/ziv/files/vereine_in_deutschland_2022.pdf
Estonia https://andmed.stat.ee/en/stat/majandus__majandusuksused__kasumitaotluseta-uksused/ER041/table/tableViewLayout2
Hungary https://www.ksh.hu/stadat_files/gsz/hu/gsz0014.html
Poland
https://stat.gov.pl/obszary-tematyczne/gospodarka-spoleczna-wolontariat/gospodarka-spoleczna-trzeci-sektor/dzialalnosc-stowarzyszen-i-
podobnych-organizacji-spolecznych-fundacji-spolecznych-podmiotow-wyznaniowych-oraz-samorzadu-gospodarczego-i-zawodowego-w-2020-
r-wyniki-wstepne,3,9.html
Slovenia https://www.cnvos.si/en/ngo-sector-slovenia/number-ngos/
Slovakia https://datacube.statistics.sk/#!/view/sk/VBD_SLOVSTAT/ns2003rs/v_ns2003rs_00_00_00_en
Finland https://www.prh.fi/en/yhdistysrekisteri/statistics/numberofassociationsandreligiouscommunities.html
Sweden https://www.statistikdatabasen.scb.se/pxweb/en/ssd/START__NV__NV0117__NV0117A/CivSamSyssJURFORM2/table/tableViewLayout1/
125
2.2.Economic value added of associations
Combining several studies and sources it is possible to identify estimates of the value added of either
associations or NPOs more generally almost in all EU Member States. To compile the data, the same
approach as for the number of associations was employed: The results of independent desk research
were compared with the findings of the previous studies, which yielded similar results. Where possible,
data from the previous studies was updated with more recent data. In addition, it was possible to close
several data gaps. Combining the different data sources, it was possible to collect the share of GDP for
24 of the 27 EU Member States. For each value, it was established whether it captures the share of GDP
for associations only (A), or NPOs more generally (NPO). For those countries where an estimate was
missing, the share of GDP was calculated by computing the average share for a set of similar countries:
• The estimate for Estonia relies on the share of GDP for Lithuania and Latvia;
• The estimate for Cyprus relies on the share of GDP for Greece;
• The estimate for Netherlands relies on the share of GDP for Germany, Belgium, and Denmark.
The table below reports on the share of GDP for all EU Member States, providing the most recent year
for which data are available and citing the corresponding source.
Table 10: Share of GDP linked to the activities of NPOs, by country.
Cou
ntry
Share
of GDP
Cove
rage
Ye
ar Source
BE
4.90% A
20
20 https://media.kbs-frb.be/fr/media/7722/306217.pdf
BG
0.40% A
20
20
https://op.europa.eu/en/publication-detail/-/publication/21adb612-42cb-
11ed-92ed-01aa75ed71a1
CZa
1.60% A
20
09 https://js.sagamorepub.com/jnel/article/download/7583/5732
DK
0.12% A
20
11
https://op.europa.eu/en/publication-detail/-/publication/21adb612-42cb-
11ed-92ed-01aa75ed71a1
DE
4.10% NPO
20
20
https://www.hausdesstiftens.org/in-diese-zukunftstechnologien-
investiert-der-deutsche-non-profit-sektor/
EE
0.79% A
Es
t
IE
3.00% NPO
20
21
https://op.europa.eu/en/publication-detail/-/publication/21adb612-42cb-
11ed-92ed-01aa75ed71a1
EL
1.40% NPO
20
12
https://www.britishcouncil.org/sites/default/files/greece_social_and_soli
darity_economy_report_english_british_council_0.pdf
ES
1.41% NPO
20
21
http://www.plataformatercersector.es/sites/default/files/1643189654_estu
dio-2021-resumen-ejecutivo.pdf
FR
5.20% A
20
18 https://www.associatheque.fr/fr/creer-association/chiffres-cles.html
HR
1.70% A
20
19
https://udruge.gov.hr/UserDocsImages/dokumenti/udruge_u_RH_2020.p
df
IT
0.50% NPO
20
19 Country fiche
CY
1.40% NPO
Es
t
LV
1.50% A
20
19
https://op.europa.eu/en/publication-detail/-/publication/21adb612-42cb-
11ed-92ed-01aa75ed71a1
LT
0.08% A
20
20
https://op.europa.eu/en/publication-detail/-/publication/21adb612-42cb-
11ed-92ed-01aa75ed71a1
LU
2.00% NPO
20
20 https://paperjam.lu/article/economie-sociale-et-solidaire-
HU
3.70% NPO
20
20
https://op.europa.eu/en/publication-detail/-/publication/21adb612-42cb-
11ed-92ed-01aa75ed71a1
MT
0.16% NPO
20
14
https://op.europa.eu/en/publication-detail/-/publication/21adb612-42cb-
11ed-92ed-01aa75ed71a1
126
Cou
ntry
Share
of GDP
Cove
rage
Ye
ar Source
NL
3.04% NPO
Es
t
AT
8.00% NPO
20
10
https://op.europa.eu/en/publication-detail/-/publication/21adb612-42cb-
11ed-92ed-01aa75ed71a1
PL
1.12% NPO
20
20
https://op.europa.eu/en/publication-detail/-/publication/21adb612-42cb-
11ed-92ed-01aa75ed71a1
PT
3.00% NPO
20
17 https://www.cases.pt/contasatelitedaes/
RO
0.60% NPO
20
16
https://op.europa.eu/en/publication-detail/-/publication/21adb612-42cb-
11ed-92ed-01aa75ed71a1
SI
1.90% NPO
20
22 Country fiche
SK
0.20% NPO
20
20
https://op.europa.eu/en/publication-detail/-/publication/21adb612-42cb-
11ed-92ed-01aa75ed71a1
FI
6.00% NPO
20
20
https://op.europa.eu/en/publication-detail/-/publication/21adb612-42cb-
11ed-92ed-01aa75ed71a1
SE
3.10% NPO
20
19
https://op.europa.eu/en/publication-detail/-/publication/21adb612-42cb-
11ed-92ed-01aa75ed71a1
As most of the data points are recent, and assuming that the share of GDP remained relatively constant
for the other cases, it is possible to calculate the contribution towards GDP in absolute terms, using data
from 2021. The results of these calculations are presented by Member State in the table below.
As specified, the estimates of the share of GDP reported above are sometimes not limited to associations
only but capture NPOs more generally. Where this is the case, the share of GDP for NPOs can be seen
as a proxy and starting point for the estimation of the GDP contributions of associations. Similarly,
where data are available for associations, these are a starting point to estimate the GDP contribution of
NPOs overall. A breakdown of the contribution of NPOs and associations towards GDP in monetary
terms is presented by country in the table below. The calculations rely on Eurostat data on GDP for
2021 to translate the shares reported above into absolute monetary terms.
Table 11: Contribution of NPOs and associations to GDP in absolute terms, by country.
Country
Coverage
Main estimate
NPOs (EUR m)
Share of
associations
among NPOs
Main estimate
associations (EUR
m)
Belgium A 26 400 93.3% 24 600
Bulgaria A 300 86.8% 300
Czechia A 4 000 95.3% 3 800
Denmark A 500 86.8% 400
Germany NPO 147 700 91.3% 134 800
Estonia A 200 94.1% 200
Ireland NPO 12 800 86.8% 11 100
Greece NPO 2 500 65.0% 1 600
Spain NPO 17 000 96.8% 16 500
France A 150 000 86.7% 130 000
Croatia A 1 000 99.5% 1 000
Italy NPO 8 900 85.2% 7 600
Cyprus NPO 300 87.0% 300
127
Country
Coverage
Main estimate
NPOs (EUR m)
Share of
associations
among NPOs
Main estimate
associations (EUR
m)
Latvia A 500 93.7% 500
Lithuania A 200 20.2% 40
Luxembourg NPO 1 400 86.4% 1 200
Hungary NPO 5 700 62.9% 3 600
Malta NPO 24 96.0% 23
Netherlands NPO 26 000 50.1% 13 000
Austria NPO 32 500 86.8% 28 200
Poland NPO 6 400 70.2% 4 500
Portugal NPO 6 400 92.9% 5 900
Romania NPO 1 400 86.8% 1 200
Slovenia NPO 1 000 88.3% 900
Slovakia NPO 200 70.7% 100
Finland NPO 15 100 97.6% 14 700
Sweden NPO 16 600 78.4% 13 000
Source: IA study
*For France, the share of GDP available provides an estimate for associations. Thus, the calculation has been
turned around, using the value for associations to extrapolate to the value of NPOs.
Combining the data from across Member States yields the estimates at EU level for both NPOs and
associations in terms of GDP contribution. Here, the same limitations described as above apply.
Table 12: EU level GDP contribution from NPO’s and associations.
Upper bound (EUR) Share of GDP (2021)
NPOs 490 bn 3.4%
Associations 420 bn 2.9%
Source: IA study
2.3.Employment
For data on employment, extensive desk research was undertaken to update and validate
previous studies. Estimates developed as part of the research performed by Salomon and
Sokolowksi provide a good first overview. They report the estimated number of FTEs
employed by associations and foundations in 2014 (see table below). The estimates can be
considered a relatively close – albeit somewhat outdated – approximation of the number of
FTEs employed by associations by EU Member State.
Additional desk research yielded more recent and more exact estimates of the number of people
employed. Importantly, the data points identified capture employment by associations only.
It was possible to identify more recent and more accurate data points for 16 out of the 27 EU
Member States. For the remaining 11 Member States, the weighted ratio between the estimated
numbers from Salomon and Sokolowski and the data points available was used to estimate fill
the data gaps.
128
Table 12: FTEs (2014) and people (most recent year) employed by associations in EU MS
Country
FTEs in 2014
according to
Salamon/
Sokolowski
(associations and
foundations)
Number of
employees
(associations)
Employees per
association
Share of
employment
Year
Belgium 450 732 538 857 3.8 11% 2022
Bulgaria 15 243 46 451 2.5 2% 2020
Czechia 96 665 117 000 0.9 2% 2017
Denmark 130 990 160 000 1.6 6% Est
Germany 2 322 895 2 838 000 4.6 7% Est
Estonia 19 765 24 000 0.6 4% Est
Ireland 177 985 164 922 5.5 7% 2021
Greece 243 022 23 553 5.0 1% 2022
Spain 664 047 535 514 2.0 3% 2021
France 1 496 736 2 200 000 1.7 8% 2018
Croatia 70 512 17 961 0.3 1% 2019
Italy 836 581 170 129 0.5 1% 2020
Cyprus 22 885 28 000 9.2 7% Est
Latvia 34 130 42 000 1.8 5% Est
Lithuania 6 608 7 185 1.0 1% 2021
Luxembourg 22 483 17 851 2.1 6% 2017
Hungary 81 909 43 814 1.1 1% 2021
Malta 10 504 5 500 3.1 2% 2020
Netherlands 841 480 1 028 000 8.0 13% Est
Austria 154 965 189 000 1.5 5% Est
Poland 190 058 260 100 3.9 2% 2020
Portugal 170 467 151 779 2.3 4% 2016
Romania 25 013 31 000 0.7 0% Est
Slovenia 42 663 5 178 0.2 1% 2021
Slovakia 17 595 10 331 0.2 0% 2020
Finland 64 549 79 000 0.7 3% Est
Sweden 178 215 72 813 0.4 2% 2020
EU-27 8 390 000 8 810 000 2.3 5% ---
The table below provides a detailed overview of the data sources for the number of people
employed by associations identified via desk research for the different EU Member States.
Table 14: Number of employees for association, including the year and source for the data available.
Number
of
people
employe
d
Yea
r
Source
BE
538 857
202
2 https://media.kbs-frb.be/fr/media/10179/zoom_barometre_associations_FR_2022
129
BG
46 451
202
0
https://op.europa.eu/en/publication-detail/-/publication/21adb612-42cb-11ed-92ed-
01aa75ed71a1
CZ
117 000
201
7
https://op.europa.eu/en/publication-detail/-/publication/21adb612-42cb-11ed-92ed-
01aa75ed71a1
IE
164 922
202
1
https://benefactslegacy.ie/wp-content/uploads/2022/03/benefacts-nonprofit-sector-
analysis-2021.pdf
EL
23 553
202
2
ES
535 514
202
1
http://www.plataformatercersector.es/sites/default/files/1643189654_estudio-2021-
resumen-ejecutivo.pdf
FR
2 200
000
201
8 https://www.insee.fr/fr/statistiques/5365639?sommaire=5371421
HR
17 961
201
9 https://udruge.gov.hr/UserDocsImages/dokumenti/udruge_u_RH_2020.pdf
IT
170 129
202
0 https://www.istat.it/it/files/2022/10/REPORT-NON-PROFIT-2022.pdf
LT
7 185
202
1
https://op.europa.eu/en/publication-detail/-/publication/21adb612-42cb-11ed-92ed-
01aa75ed71a1
LU
17 851
201
7
https://op.europa.eu/en/publication-detail/-/publication/21adb612-42cb-11ed-92ed-
01aa75ed71a1
HU
43 814
202
1 https://statinfo.ksh.hu/Statinfo/haViewer.jsp
M
T 5 500
202
0
https://maltacvs.org/wp-content/uploads/2022/02/Malta-Council-for-the-Voluntary-
Sector-Executive-Report-2020.pdf
PL
260 100
202
0
https://stat.gov.pl/obszary-tematyczne/gospodarka-spoleczna-
wolontariat/gospodarka-spoleczna-trzeci-sektor/dzialalnosc-stowarzyszen-i-
podobnych-organizacji-spolecznych-fundacji-spolecznych-podmiotow-
wyznaniowych-oraz-samorzadu-gospodarczego-i-zawodowego-w-2020-r-wyniki-
wstepne,3,9.html
PT
151 779
201
6
https://www.cases.pt/wp-
content/uploads/2019/07/19ContaSatEconSocial_2016ENG.pdf
SI
5 178
202
1 https://www.cnvos.si/en/ngo-sector-slovenia/number-people-employed-ngos/
SK
10 331
202
0
https://datacube.statistics.sk/#!/view/en/VBD_SLOVSTAT/ns2004rs/v_ns2004rs_0
0_00_00_en
SE
72 813
202
0
https://www.scb.se/en/finding-statistics/statistics-by-subject-area/business-
activities/structure-of-the-business-sector/the-civil-society/
2.4.Sectors of activity
Associations are active in a wide range of sectors. Building on data from the Comparative legal analysis
of associations laws and regimes in the EU (European Commission, 2022),42
the table on the following
pages indicates the share of NPOs active in different sectors across EU Member States.
Given that associations account for the largest share of NPOs in almost all countries (see above), the
values presented below are a good proxy for the actual shares among associations.
A comparison across Member States appears to be difficult. Due to differences in reporting, it is not
easily possible to compare data by sector across countries. Already the different sectors specified
suggest that individual Member States interpret and define the scope of relevant sectors differently. In
addition, there might further be differences in the interpretation of the scope of the same sector across
countries. This appears to be particularly relevant for the social domain. While for some countries (e.g.
Czechia and Denmark) all social services appear to be captured by ‘health and social services’, the
statistics for Germany appear to be more granular.
42
https://op.europa.eu/en/publication-detail/-/publication/21adb612-42cb-11ed-92ed-01aa75ed71a1
130
Yet, an attempt was made in the IA study to classify the activities reported by Member States to facilitate
the comparability of data. First, activities have been allocated by NACE code. Due to differences in the
level of aggregation of the reported data, shares can only be reported at the highest NACE code level.
The table suggests that generally, most NPOs (and thus most likely associations) are active in the social
and health related, as well as the cultural, recreational and communication sectors. Across countries and
average of about a fourth of all entities are active in the social and human health realm, while close to
40% are active in communication, information, arts, entertainment, and recreation.
Table 13: Activities of NPOs by sector, using the NACE classification.
Country
M and P -
Research and
education
Q - Human
health and
social work
activities
J and R - Information,
communication and arts,
entertainment and
recreation
S - Other
services
activities
Other/
unclear
BE 23% 16% 61%
BG 34% 45% 21%
CZ 29% 23% 33% 16%
DK 11% 40% 3% 47%
DE 21% 11% 47% 18% 4%
IE 33% 8% 7% 54%
EL 30% 37% 12% 21%
ES 33% 10% 18% 40%
FR 7% 11% 63% 15% 4%
HR 9% 13% 45% 27% 7%
IT 4% 10% 70% 11% 6%
LT 56% 44%
LU 80% 20%
HU 61% 39%
AT 21% 27% 15% 38%
PL 11% 24% 39% 27%
PT 4% 16% 47% 27% 7%
SI 9% 19% 52% 11% 9%
FI 6% 35% 16% 43%
SE 16% 20% 27% 19% 18%
Note that data for Malta exceeded 100% significantly. Thus, data for this country were excluded from
the overview. For Spain, it was not possible to allocate a considerable share of relevant activities
(related to Ideology, culture, education and communication (38.1%)).
Another, more promising approach for clustering the activities for NPOs reported by Member States is
to use the International Classification of Non-Profit Organizations43
. This classification differentiates
12 groups of activities for NPOs. Comparing these groups or categories with the categories of activities
of Member States, this classification appears to be more fit for purpose and allows for a more nuanced
and disaggregated comparison of the activities of NPOs and associations across sectors. The results of
the clustering are reported in the table below. Note that again, due to the reporting style of Member
States, some categories had to be merged.
43
https://unstats.un.org/unsd/classifications/Family/Detail/2008.
131
There are seven countries where more than half of all NPOs are active in just one (or two) sectors. In
France, Italy, and Hungary, and Slovenia, more than 50% of the entities are active in the cultural,
communication and recreational sector. Also for the other countries, this sector appears to be
particularly relevant, with a third of NPOs active in it.
The second most important sectors (with regards to the number of entities active) are human health and
social services. In Luxembourg, entities in this sector account for 80% of NPOs overall, and the share
of entities further exceeds 50% in Lithuania. Among the other countries for which data are available,
these sectors comprise on average a fifth of the entities in the given country.
In addition, also education, professional and research services and activities are pursued by relatively
large shares of NPOs across Member States. In Bulgaria and Ireland, about every third NPO are active
in these sectors, while the share of entities exceeds 10% in the Czech Republic, Denmark, Germany,
and Poland.
132
Table 14: Activities of NPOs by sector, using the International Classification of Non-Profit Organizations44
Category A B and K C and D E F G H I J L
BE 16% 23% 12%
BG 34% 45% 24%
CZ 33% 29% 23%
DK 3% 11% 40% 5%
DE 47% 21% 11% 3% 9% 1% 4% 2% 4%
IE 15% 7% 23% 6% 27% 7% 3% 5% 7%
EL 37% 30% 12%
ES
FR 63% 7% 11% 3% 15%
HR 44% 9% 13% 5% 10% 17% 2%
IT 70% 4% 10% 2% 8% 6%
LT 58%
LU 80%
less
than 5%
HU 61%
MT
AT 27% 12% 18% 8% 1% 7% 28%
PL 39% 11% 24%
PT 47% 7% 13% 1% 3% 8% 0% 12% 5% 3%
SI 52% 9% 13% 7% 12% 1% 3% 2%
FI 41% 6% 4% 1% 10% 37%
SE 25% 2% 3% 1% 30% 9% 2% 3% 3% 21%
A = Culture, communication, and recreation activities, B and K = Education services and Professional, scientific, and administrative services, C and D = Human health
services and Social services, E = Environmental protection and animal welfare activities, F = Community and economic development, and housing activities, G = Civic,
44
Source: https://op.europa.eu/en/publication-detail/-/publication/21adb612-42cb-11ed-92ed-01aa75ed71a1.
133
advocacy, political and international activities, H = Philanthropic Intermediaries and voluntarism promotion, I = Religious congregations and associations, J = Business,
professional, and labour organizations, L = Other Activities
134
Employment across sectors
Data suggests that employment is more concentrated in some of the sectors NPOs are active in. The
table below reports the share of associations in France and Germany that have employees by sector. As
the data suggests, 52% of all associations providing health and social services in Germany have
employees, compared to only 16% of associations active in the country in the realm of philanthropy
and voluntarism promotion. Data for France is a bit more scattered, but it suggests that the share of
associations with employees is the highest in the educational and research sector – for this sector, the
share of associations employing people is second-highest in Germany.
Table 15: Share of associations with employees among all associations, by sector.
Categorie
s Share of associations with employment France Germany
A Culture, communication, and recreation activities 9% 17%
B and K
Education services and Professional, scientific, and administrative
services 24% 39%
C and D Human health services and Social services 17% 52%
E Environmental protection and animal welfare activities N/A 17%
F Community and economic development, and housing activities 18% 22%
G Civic, advocacy, political and international activities 5% 24%
H Philanthropic Intermediaries and voluntarism promotion N/A 16%
I Religious congregations and associations N/A 28%
J Business, professional, and labour organizations N/A 32%
L Other Activities N/A 22%
Year 201945
201746
Looking at the share of employees across sectors, it becomes clear that most of them are employed in
the human health and social services sectors. Almost two thirds of all people employed by NPOs work
in these sectors in France and Portugal, and almost half in Ireland. The second most important sectors
are education and research in Ireland and Portugal, and the cultural, sports and recreational sector in
France.
The difference between the share of organisations with employees compared to the high number of
employees working for association in the social sectors in France could suggest that there is a small
number of large entities active in this sector, which is further supported by the fact that only 11% of all
associations in France have paid staff.47
Table 16: Share of employees by sector.
Categories Share of employees employed by NPOs FR IE PT IT HU
A
Culture, communication, and recreation
activities 15% 4% 5%
16%
53%
B and K
Education services and Professional, scientific,
and administrative services 19% 23% 15%
16%
4%
C and D Human health services and Social services 55% 48% 62% 36% 30%
45
https://injep.fr/wp-content/uploads/2019/07/Chiffres-cles-Vie-associative-2019.pdf
46
https://www.ziviz.de/download/file/fid/529
47
https://injep.fr/wp-content/uploads/2019/07/Chiffres-cles-Vie-associative-2019.pdf.
135
Categories Share of employees employed by NPOs FR IE PT IT HU
E
Environmental protection and animal welfare
activities N/A 1% 0.3%
1%
2%
F
Community and economic development, and
housing activities 6% 17% 1%
2%
6%
G
Civic, advocacy, political and international
activities 5% 2% 1%
2%
3%
H
Philanthropic Intermediaries and voluntarism
promotion N/A 0.4% 0.1%
2%
1%
I Religious congregations and associations N/A 1% 4% 1% 2%
J
Business, professional, and labour
organizations N/A 2% 4%
23%
N/A
L Other Activities N/A 2% 8% 1% N/A
Year 201948
202049
201650
202251 202152
Table 19: Activities covered by associations/ NPO’s by Member state
48
INJEP (2019) Les chiffres clés de la vie associative. Last accessed on 17/03/2023 and available at :
https://injep.fr/wp-content/uploads/2019/07/Chiffres-cles-Vie-associative-2019.pdf
49
Benefacts (2021) Nonprofit Sector Analysis. Available at: https://benefactslegacy.ie/wp-
content/uploads/2022/03/benefacts-nonprofit-sector-analysis-2021.pdf.
50
Instituto Nacional De Estatistica (2016) Social Economy Satellite Account. Available at:
https://www.cases.pt/wp-content/uploads/2019/07/19ContaSatEconSocial_2016ENG.pdf.
51
Istituzioni Non Profit (2022) Social Economy Satellite Account – Annon 2020. Available at:
https://www.istat.it/it/files//2022/10/REPORT-NON-PROFIT-2022.pdf.
52
https://statinfo.ksh.hu/Statinfo/haViewer.jsp.
136
Country Activities covered by associations/ NPOs
BE
- social and medical actions (23%)
- arts (16%)
- services (12%)
BG
- education (34%)
- social services (29%)
- regional development (24%)
- youth (16%)
CZ
- culture, advertisement, recreation (32.6%)
- education (28.7%)
- health and social services (23.0%)
DK
- health and social services (40%)
- research (6%)
- education (5%)
- retail (4.6%)
- culture (2.8%)
DE53
- sports (22.6%)
- education (18.3%)
- culture and media (16.1%)
- leisure, social life (7.9%)
- social services (7.1%)
- other (4.3%)
- religion (4.0%)
- health (3.5%)
- environment and environmental protection (3.1%)
- civil protection (3.1%)
- international solidarity (3.1%)
- consumer protection (2.7%)
- research (2.3%)
- business and professional associations (1.6%)
- community services (0.7%)
IE
- education (33%)
- alleviation of poverty or economic hardship (7,5%)
- religion (6,6%)
- any other purposes that benefit the community (53,9%)
EL
- culture (37%)
- social solidarity (18%)
- health and social protection (12%)
- environment (12%)
- child protection
ES
- ideology, culture, education and communication (38,10%)
- women, equal treatment and non-discrimination (1,70%)
- children, youth, seniors, family and well-being (3,50%)
53
Based on https://www.ziviz.de/download/file/fid/529.
Country Activities covered by associations/ NPOs
- environment and health (9,80%)
- disability and dependency (2,20%)
- victims, affected and injured parties (1,70%)
- solidarity (10,70%)
- economy, technology, profession and interest representation (18,10%)
- sport and recreation (9,70%)
- other (4,60%)
FR
- sports (24%)
- leisure, entertainment, social life (19%)
- rights and interest representation (15%)
- art (14%)
- education, training and research (7%)
- social assistance, humanitarian aid, charity (excluding accommodation)
- (7%)
- culture (excluding show, protection and promotion of heritage) (6%)
- health (3%)
- management of business services and local development (3%)
- social or medical accommodation (1%)
HR
- sport (17,7%)
- culture and art (12,9%)
- sports (12,8%)
- education, science and research (8,5%)
- social activity (7,4%)
- economy (6,4%)
- human rights (5,7%)
- international cooperation (5,6%)
- democratic political culture (5,5%)
- environmental protection (5,2%)
- health care (3,7%)
- sustainable development (3,2%)
- defenders and victims (2,1%)
- spirituality (1,5%)
- hobby (1,2%)
- other (0,7%)
137
Country Activities covered by associations/ NPOs
IT
- culture, sport and recreation (70%)
- social assistance and civil protection (6,6%)
- trade union relations and interest representation (6%)
- education and research (3,8%)
- healthcare (3,3%)
- protection of rights and political activity (2,4%)
- environment (2,1%)
- other (philanthropy, religion, economic development) (5,8%)
LT
- childcare and youth (32,2%)
- social problems and health (25,4%)
LU
- collective social and personal services (60%)
- health and social work (around 20%)
- education, agriculture, manufacturing, electricity, gas and water, retail
- (less than 5%)
HU
- leisure (22%)
- sports (22%)
- culture (17%)
MT
- philanthropy (17,8%)
- education and sport (41,2%)
- religion (5%)
- health (14%)
- social and community (45,6%)
- culture, arts and national heritage (38,6%)
- environment and animal welfare (10,6)
- promotion of human rights (9,9%)
AT54
- sports (26.6%)
- saving clubs (17.5%)
- charity (7.3%)
- profession (6.4%)
- gardening and animal protection (5.9%)
- conviviality (6.2%)
- parents (4.4%)
- formal military staff (2.1%)
- student affairs (1.4%)
- religion (1.2%)
- colleague (0.5%)
- rotary clubs, Lions Club, Schlaraffia (0.5%)
- other (20.0%)
PL - sport, tourism, recreation, hobby (26,9%)
54
Translated into shares.
Country Activities covered by associations/ NPOs
- rescue services (15,3%)
- culture and arts (12,4%)
- education and upbringing, scientific research (10,5%)
- social and humanitarian aid (8,3%)
PT55
- Culture, communication, and recreation activities (46.9%)
- Education services (3.6%)
- Human health services (3.3%)
- Social services (9.7%)
- Environmental protection and animal welfare activities (1.0%)
- Community and economic development, and housing activities (2.9%)
- Civic, advocacy, political and international activities (8.2%)
- Philanthropic Intermediaries and voluntarism promotion (0.4%)
- Religious congregations and associations (11.9%)
- Business, professional, and labour organizations (5.3%)
- Professional, scientific, and administrative services (3.5%)
- Other Activities (3.1%)
SI
- sports and recreation (35,3%)
- helping people in need (13,0%)
- culture and art (17,0%)
- scientific research, education (9,3%)
- environmental protection, animal and plant breeding (7,1%)
- housing (5,9%)
- local development (6,4%)
- politics (1,2%)
- spiritual life (2,6%)
- other (2,1%)
FI
- not classified (29,2%)
- culture (17,8%)
- sports and exercise (13,6%)
- profession and trade (10,1%)
- leisure (9,6%)
- social and health (6,2%)
- other (6,0%)
- political (4,3%)
- national defence (1,9%)
- religion (1,3%)
SE
culture and recreation (27%)
social welfare (20%)
education and research (16% )
religion (14%)
employment (8%)
55
Amended by https://www.cases.pt/wp-
content/uploads/2019/07/19ContaSatEconSocial_2016ENG.pdf.
138
Country Activities covered by associations/ NPOs
politics, identity and interest representation (5%)
139
2.5.Number of cross border associations
Data on the share of associations operating across borders within the EU are very scarce. The table
below reports the few data points available.
Table 20: Available estimates for cross-border activities.
Country
Share of associations
active across borders Year Source
Germany 8% 2017 ZiviZ-Survey 2012/2017
Estonia
36% 2019 https://www.siseministeerium.ee/media/331/download
Italy
1.40% 2020
https://www.istat.it/it/files//2022/10/REPORT-NON-
PROFIT-2022.pdf
Austria
8.50% 2014
https://research.wu.ac.at/ws/files/19851385/FB_01_201
5_gesamt.pdf
The values for Estonia and Italy have to be treated with care. For Estonia, the 36% refer to the total
number of NPOs active internationally, including third countries. Also given Estonia’s proximity to a
third country (Russia), this share is clearly an overestimation of the actual share of associations
operating across borders but within the EU. The value for Italy represents the share of associations that
indicate to be active in the field of humanitarian/ international solidarity. This value therefore also
captures associations active in third countries but omits any association active in another field across
borders. It can therefore be considered to be an underestimation of the true share.
The shares for Germany and Austria stem from representative surveys among associations in the
respective countries. These values can therefore be considered robust and representative for the two
countries. The similarity of the shares of cross-border associations in the two countries might be
explained by their socio-economic, social, cultural, and linguistic similarities. Given their historically
strong third sectors and vibrant, organised civil societies, as well as their level of economic prosperity,
the share of associations active across the EU might be overall smaller than the shares reported for
Germany and Austria. However, data for these countries appears reliable. Therefore, this study uses the
minimum value of 8% identified for Germany as a starting point for its estimations. The table below
further specifies the number of cross-border associations for slightly smaller shares (5% and 6%) that
are, however, not backed by hard evidence.
Table 21: Estimated number of cross-border associations.
Estimate
Total
number of
associations Number of cross-border associations
5% 6% 8%
Lower bound 3 800 000 190 000 228 000 304 000
Central
estimate
3 870 000 194 000 232 000 310 000
Upper bound 4 000 000 200 000 240 000 320 000
Making use of the share of FTEs working on cross-border activities reported by the study for the
European Parliament56
is another approach to estimate the share and number of cross-border
56
https://www.europarl.europa.eu/meetdocs/2014_2019/plmrep/COMMITTEES/JURI/DV/2021/05-
11/Study_StatuteforEuropeancross-borderassociationsandnon-profitorganisations_EN.pdf.
140
associations. The study reports on the shares of FTEs employed by NPOs that pursue activities
internationally. These shares for NPOs can be used as proxies for associations, too.
Assuming that the share of FTEs employed by associations active across borders is similar to the share
of associations active across borders, these shares can be employed to gain estimates of the number of
cross-border associations per Member State.
Data are available for 14 of the EU-27, albeit it is not made transparent which year these data refer to
(the study suggest that the estimates stem from various years). The arithmetic average share (1.19%) is
used for countries for which no estimate is available. The table below reports the results of this
estimation.
Table 22: Alternative approach towards the estimation of cross-border associations, by country.
Country
Share of FTEs active
internationally
Total number of
associations Number of cross-border associations
Belgium 0.4% 140 188 600
Bulgaria 1.2% 18 305 200
Czechia 1.4% 126 661 1 800
Denmark 1.2% 100 000 1 200
Germany 1.6% 615 759 9 900
Estonia 1.2% 43 149 500
Ireland 0.4% 29 801 100
Greece 1.2% 4 671 100
Spain 2.6% 264 851 6 900
France 2.4% 1 300 000 31 200
Croatia 1.2% 52 731 600
Italy 0.6% 309 723 1 900
Cyprus 1.2% 3 046 40
Latvia 1.2% 22 834 300
Lithuania 1.2% 7 087 100
Luxembourg 1.2% 8 377 100
Hungary 1.0% 38 412 400
Malta 1.2% 1 780 20
Netherlands 1.2% 128 553 1 500
Austria 0.4% 130 162 500
Poland 1.0% 66 800 700
Portugal 1.2% 66 761 800
Romania 1.2% 46 430 600
Slovenia 1.2% 24 375 300
Slovakia 0.9% 50 575 500
Finland 0.4% 108 032 400
Sweden 2.3% 161 843 3 700
EU-27 --- 3 870 000 65 000
However, as already the study that the study for the European Parliament argues that the shares above
severely underestimate the true dimension of cross-border activities, suggesting that these estimates
present the lower bound estimate of associations active across borders.
141
2.6.Number of FTEs on cross-border activities
Using the same FTE data and combining it with the data on the total number of FTEs employed by
associations by the EESC yields estimates for the number of FTEs working on cross-border activities
by country. The arithmetic average is used for countries with missing data. Note that as for the number
of cross-border associations, the same limitation apply. The values presented below as central estimate
are therefore most likely underestimating the true number of FTEs active across borders and should be
interpreted with care. Because of these uncertainties, an error margin of 10% has been employed.
Table 23: Number of FTEs working on cross-border activities, by country.
Country FTEs in 2014
Lower
bound
estimate (-
10%)
FTEs cross
border
Central
estimate
Upper
bound
estimate
(+10%)
Belgium 451 000 1 600 1 800 2 000
Bulgaria 15 000 200 200 200
Czechia 97 000 1 200 1 400 1 500
Denmark 131 000 1 400 1 600 1 700
Germany 2 323 000 33 400 37 200 40 900
Estonia 20 000 200 200 300
Ireland 178 000 600 700 800
Greece 243 000 2 600 2 900 3 200
Spain 664 000 15 500 17 300 19 000
France 1 497 000 32 300 35 900 39 500
Croatia 71 000 800 800 900
Italy 837 000 4 500 5 000 5 500
Cyprus 23 000 200 300 300
Latvia 34 000 400 400 400
Lithuania 7 000 100 100 100
Luxembourg 22 000 200 300 300
Hungary 82 000 700 800 900
Malta 11 000 100 100 140
Netherlands 841 000 9 100 10 100 11 100
Austria 155 000 600 600 700
Poland 190 000 1 700 1 900 2 100
Portugal 170 000 1 800 2 000 2 200
Romania 25 000 300 300 300
Slovenia 43 000 500 500 600
Slovakia 18 000 100 200 200
Finland 65 000 200 300 300
Sweden 178 000 3 700 4 100 4 500
EU-27 8 389 000 114 200 126 800 139 500
2.7.GDP generated by cross-border activities
Combining the results of the previous estimations, it is further possible to calculate the GDP generated
by cross-border activities. For this, the GDP generated by FTE working for associations is calculated.
142
This information is then used to extrapolate the cross-border GDP added, using the estimated number
of FTEs active across borders calculated above. For GDP, both the lower and upper bound estimates
have been used for these calculations. Since the total number of FTEs working cross-border derived is
most likely underestimating the true value, the upper bound estimate should be considered as the most
reliable.
The table below reports on the estimations per country. Given the assumptions and estimations made to
derive the individual components for this calculation, the estimates should be treated with care,
especially at Member State level. Nevertheless, the estimates derived at EU level (highlighted in blue
at the bottom of the table) suggest that the total GDP generated by cross-border activities of associations
is considerable.
143
Table 24: GDP linked to cross-border activities of associations, by country.
Country FTEs (total)
GDP
associations
(EUR m)
GDP associations per FTE
(EUR)
FTEs cross-border
(lower bound)
FTEs cross-border
(upper bound)
GDP cross-
border lower
bound (EUR m)
GDP cross-
border upper
bound (EUR m)
Belgium 450 732 24 600 55 000 1 600 2 000 88.0 110.0
Bulgaria 15 243 300 20 000 200 200 4.0 4.0
Czechia 96 665 3 800 39 000 1 200 1 500 46.8 58.5
Denmark 130 990 400 3 000 1 400 1 700 4.2 5.1
Germany 2 322 895 134 800 58 000 33 400 40 900 1 937.2 2 372.2
Estonia 19 765 200 10 000 200 300 2.0 3.0
Ireland 177 985 11 100 62 000 600 800 37.2 49.6
Greece 243 022 1 600 7 000 2600 3 200 18.2 22.4
Spain 664 047 16 500 25 000 15 500 19 000 387.5 475.0
France 1 496 736 130 000 87 000 32 300 39 500 2 810.1 3 436.5
Croatia 70 512 1 000 14 000 800 900 11.2 12.6
Italy 836 581 7 600 9 000 4,500 5 500 40.5 49.5
Cyprus 22 885 300 13 000 200 300 2.6 3.9
Latvia 34 130 500 15 000 400 400 6.0 6.0
Luxembourg 22 483 1 200 53 000 200 300 10.6 15.9
Lithuania 6 608 40 6 000 100 100 0.6 0.6
Hungary 81 909 3 600 44 000 700 900 30.8 39.6
Malta 10 504 23 2 000 100 140 0.2 0.3
Netherlands 841 480 13 000 15 000 9 100 11 100 136.5 166.5
Austria 154 965 28 200 182 000 600 700 109.2 127.4
Poland 190 058 4 500 24 000 1 700 2 100 40.8 50.4
Portugal 170 467 5 900 35 000 1 800 2 200 63.0 77.0
Romania 25 013 1 200 48 000 300 300 14.4 14.4
Slovenia 42 663 900 21 000 500 600 10.5 12.6
Slovakia 17 595 100 6 000 100 200 0.6 1.2
144
Finland 64 549 14 700 228 000 200 300 45.6 68.4
Sweden 178 215 13 000 73 000 3 700 4 500 270.1 328.5
EU-27 8 388 697 420 000 50 000 114 200 139 500 5 710 7 000
145
2.8.Size of NPOs and associations (SMEs and large associations)
To understand the structure of the size of associations, the number of employees is one important metric
that also allows comparisons to other forms of (economic) organisations.
In Italy, 91% of all associations do not have any employees, but only rely on volunteers. In contrast,
the share of associations that employ more than 10 people is at just 1% (see table below). Patterns are
similar in other countries. In France, 88.2% of the associations do not have any employees,57
while this
share is lower in Germany, where about one in four associations employs one person, and 7% of the
associations employ at least 50 people.58
In Lithuania, 96% of all associations have fewer than 5
employees, and for Malta, a study suggests that 95% of all associations qualify as micro or small
enterprises. In Flanders (Belgium), 95% of all associations have less than 50 employees.59
Table 25: Different sizes of associations, based on the number of employees, by country.
Country No employees Employees 1 employee
1 or 2
employees
3 to 9
employees
10 or more
employees 50 or more
Share of total Of which
Belgium
Bulgaria
Czechia
Denmark
Germany 72% 28% 24% 7%
Estonia
Ireland
Greece
Spain
France 88.2% 12% 6.40%
Croatia
Italy 91% 9% N/A 4.8% 2.7% 1.2% N/A
Cyprus
Latvia
Lithuania
Luxembourg
Hungary
Malta
Netherlands
Austria
Poland 63.40% 37%
Portugal
Romania
Slovenia 96% 5% 2.4% 3.3% 1.2% 0.4% 0.1%
Slovakia
57
https://www.associations.gouv.fr/l-association-employeur-de-salaries.html
58
https://www.ziviz.de/download/file/fid/529.
59
https://verso-net.be/cijfers/vestigingen/vestigingen.
146
Finland
Sweden
147
3. Methodology to assess the baseline scenario
3.1.Dynamic baseline
Assessing hypothetical scenarios requires to formulate different assumptions and collect various
reference data from previous experiences to be used for extrapolation, as by definition there are no data
available that can be used for such assessment. The methodology of the IA study to assess the impacts
of the different policy options builds on findings from the economic dimension of associations across
the EU, as described in the previous Sections, and therefore bears the same caveats. Data ranges and
best estimates presented and developed here help to draw an approximate picture of the potential
impacts on associations across the EU of the different policy options, particularly related to the
following dimensions:
- Estimation of the number of associations and the share of those currently operating cross-
border (presented in previous Sections)
- Estimation of the number of potential cross-border associations and the share potentially
unlocked by policy intervention
- Estimation of the proportionate GDP and employment of potential cross-border
association
- Estimation of costs for launching and operating cross border
- Identification and selection of potential impacts of policy options
- Qualitative assessment of impacts intensity
- Translation of qualitative impact intensity into quantitative percentages
As regards the size of associations, survey and interviews show that small associations are equally
interested in going-cross border. Notably, as regarding potential/new cross-border associations, major
impacts are expected on small associations. Policy intervention could help to simplify the process of
establishing and operating an association in different Member States, making it easier for small
associations to expand their activities across borders.
Larger associations have lower fix costs, so existing barriers are arguably lower. Large associations
generally have the resources to navigate different legal requirements in different jurisdictions, but they
may still face challenges related to complying with different rules and regulations. Policy intervention
could help large associations by reducing uncertainty and facilitating cross-border activities, so they
will be impacted mostly through cost reduction, rather than on the decision to go cross-border. Estimates
on costs reduction are expected to differ only in relative terms and not being dependent on the size of
associations. What can be expected to change is the relative importance of these reductions in the cost
structure.
For this assessment, various sources of information were used. In particular the IA study used estimates
of associations, employment and GDP, as described in previous Sections, and combined them with data
collected through the stakeholder consultations (targeted survey and in-depth interviews), other reports
(e.g. Single Market report60
) and qualitative assessment of options. However, important limitations
come from the nature of the assessment, which needs to take into account various uncertainty elements.
For instance, the impacts of any policy options lowering barriers to entry will still depend on personal
decisions of individual associations to expand cross-border, bearing important uncertainties.
Therefore, the estimates presented hereafter should be interpreted with the necessary care. Estimates
should be regarded as supporting the understanding of the overall magnitude of costs which the policy
60
https://single-market-economy.ec.europa.eu/news/commission-presents-2022-single-market-report-and-
updated-depth-review-europes-strategic-2022-02-23_en
148
options aim to reduce, based on the best estimate techniques using a combination of publicly available
statistics, survey/interviews responses and extrapolation techniques. In the following Sections,
methodological steps taken will be present more in detail to assess the potential impacts of the different
policy options.
3.2.Potential cross-border associations and their unlocked potential
According to the Better regulation’ guidelines61
, the design of possible policy options should always
consider the option of changing nothing (baseline scenario) and use this as the benchmark against which
each policy option should be compared. In order to use the baseline scenario as benchmark, its
opportunity costs were assessed and measured. Here opportunity costs are to be intended as:
- the potential GDP contribution and additional employment related to associations’
foregone international activities, due to the existing barriers and no policy change;
- the maximum estimated GDP contribution and additional employment that could be
generated, if any policy options induced all potential associations interested in going cross-
border to expand their operations beyond one Member State.
In order to estimate the number of potential associations willing to go cross-border, various sources
were employed, including Eurobarometer62
and Eurochambers63
surveys which explored the interest to
go cross-border for companies not yet active. A further breakdown by size of organisations was used.
Data on micro-enterprises were used as proxy for associations, as associations can be conceptualised to
be most similar to micro-enterprises, given their resources available and number of employees
(presented in previous Sections).
These sources pointed to the same estimate of 9% share of all companies that are willing to go cross-
border. This figure was triangulated with information collected via the stakeholder survey specifically
targeted at associations, which showed comparable results. Notably, the survey pointed towards a
slightly higher share of associations willing to go cross-border (~17%). In terms of size, over 90% of
associations responding to the survey were small or micro-organisations, reflecting the typical (micro)
structure of associations. However, due to the topic of the survey and the stakeholders reached out to,
there was likely to be a certain selection bias towards respondents from organisations that are interested
in the topic of cross-borders activities, leading to a slightly overestimated figure.
By taking this potential bias into account, the more conservative estimate was taken into account (i.e.
9%). This share was applied to the number of existing associations in order to estimate the
approximate magnitude of associations that are willing to go cross-border.
Table 26: Estimated number of potential cross-border associations.
Number of potential (new) cross-border
associations64
Lower bound estimate (3.8 m * 9%) 340 000
Best estimate (3.87 m * 9%) 350 000
61
https://commission.europa.eu/law/law-making-process/planning-and-proposing-law/better-regulation/better-
regulation-guidelines-and-toolbox_en
62
https://europa.eu/eurobarometer/api/deliverable/download/file?deliverableId=51209.
63
https://www.eurochambres.eu/wp-content/uploads/2020/08/Business-Survey-The-state-of-the-Single-Market-
Barriers-and-Solutions-DECEMBER-2019.pdf.
64
These figures refer to associations that are currently operating in one single Member States but potentially
interested in going cross-border.
149
Upper bound estimate (4 m * 9%) 360 000
However, it was not realistic to assume that any policy option could solve all existing barriers, being
some of these outside the scope of intervention. Assessing a hypothetical counterfactual scenario, it is
important to collect reference points from previous experiences. Thus, in order to estimate the number
of potential cross-border associations that could be affected by policy intervention, the “30 years of
Single Market” report65
was identified and used as the most suitable benchmark. The report estimated
that companies’ trade in services within the Single Market increased from 5% to 8% (as a share of
the GDP) within 2004-2019 in the EU, representing an increase of 60% of trade in services within the
Single Market, while substantial reduction of barriers has been observed. A potential policy change
lifting barriers for cross border operations of associations can be assumed to also be a progressing
development over a period of similar duration, i.e. ~15 years. Data on companies’ trade in services were
used as proxy for associations, as associations mostly provide services, as indicated by stakeholders
consulted. This is also confirmed by available literature, pointing towards a large share of associations
engaged in service provision66
. Therefore, this value was used as a proxy to estimate the impact on
associations from further integration of the Single Market, if some of the barriers were lifted through
policy intervention, assuming they are likely to experience a similar impact over a similar timespan
of 15 years.
By applying the same 60% increase to the number of associations estimated to be already active cross-
border, an estimate is made of a total potential cross border associations of ~ 185 000 that are
realistically within the scope of reach to go cross-border in the event of sufficient policy
intervention. These are the associations that could be incentivised to go cross-border in a timeframe of
15 years in the event of sufficient policy intervention, similar to what was observed for companies in
recent decades as outlined in the Single Market report. These represent ~53% of the estimated total
theoretical maximum number of associations interested in going cross-border (i.e. 350 000 associations
see table above).
GDP and employment of potential cross-border associations
The employment and GDP contribution of potential cross-border associations were calculated based on
figures available for associations already active cross-borders (see previous Sections on steps for
calculations). In particular, it was assumed that potential cross-border associations would generate
proportionally equivalent values of employment and GDP contribution, therefore in the IA study
constant estimates for associations currently operating cross border were applied to the number of
potential newly unlocked cross-border associations, according to the formulas below:
𝐶𝐵 𝑎𝑠𝑠𝑜𝑐𝑖𝑎𝑡𝑖𝑜𝑛𝑠 (310 000): 𝑖𝑛𝑡𝑒𝑟𝑛𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝐹𝑇𝐸𝑠(126 800) =
𝑝𝑜𝑡𝑒𝑛𝑡𝑖𝑎𝑙 𝐶𝐵 𝑎𝑠𝑠𝑜𝑐𝑖𝑎𝑡𝑖𝑜𝑛𝑠(350 000) ∶ 𝑝𝑜𝑡𝑒𝑛𝑡𝑖𝑎𝑙 𝑖𝑛𝑡𝑒𝑟𝑛𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝐹𝑇𝐸𝑠 (142 500)
The variables used are as follows:
- CB associations is the number of associations already active cross-border, estimated as
described in previous Sections
- International FTEs are associations’ employees dealing with cross-border operations, estimated
as described in previous Sections
65
https://single-market-economy.ec.europa.eu/publications/30-years-single-market-taking-stock-and-looking-
ahead_en
66
https://link.springer.com/chapter/10.1007/978-3-319-71473-8_3
150
- Potential CB associations is the number of potential associations willing to expand cross-
border, estimated as describe above
- Potential international FTEs are the additional (potential) associations’ employees that would
deal with cross-border operations (if potential CB associations were to expand cross-border),
estimated by applying the above formula
𝐶𝐵 𝑎𝑠𝑠𝑜𝑐𝑖𝑎𝑡𝑖𝑜𝑛𝑠 (310𝑘): 𝐺𝐷𝑃 𝑐𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 (7𝑏𝑛) = 𝑝𝑜𝑡𝑒𝑛𝑡𝑖𝑎𝑙 𝐶𝐵 𝑎𝑠𝑠𝑜𝑐𝑖𝑎𝑡𝑖𝑜𝑛(350𝑘)
∶ 𝑝𝑜𝑡𝑒𝑛𝑡𝑖𝑎𝑙 𝐺𝐷𝑃 𝑐𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 (9𝑏𝑛)
The variable used are as follows
- CB associations is the number of associations already active cross-border, estimated as
described in previous Sections
- GDP contribution is the GDP generated by international activities of current cross-border
associations, estimated as described in previous Sections
- Potential CB associations is the number of potential associations willing to expand cross-
border, estimated as describe above
- Potential GDP contribution is the additional (potential) GDP that would be generated by the
potential cross-border associations (if they were to expand cross-border), estimated by applying
the above formula.
As noted above, ~53% of potential cross-border associations are estimated to be realistically within the
scope of reach to go cross-border in the event of sufficient policy intervention. This applies also to the
corresponding FTEs and GDP contribution generated.
Therefore, a total of potential new cross-border associations within the range of 185 000 associations
(60% of the estimated current cross-border associations (310 000), which translates to ~53% of the
estimated total number of association interested in going cross-border, i.e. 350 000) was estimated,
which could be incentivised to go cross-border in a timeframe of 15 years in the event of sufficient
policy intervention, similar to what has been observed for companies in recent decades as outlined in
the Single Market report. Assuming these new associations would generate employment and GDP
contribution (proportionally) equivalent to those already active cross-border, an estimate of around
~75 000 new jobs (i.e. additional FTEs working cross-border) and additional contribution to the GDP
of their international activities of EUR 4.2 bn can be made. The latter represents the maximum
estimated annual opportunity cost of no policy intervention
The IA has added 3 scenarios based on a -5, -10 and -15 p.p. lower potential compared to the above
calculated “benchmark” of 185 000 associations. The analysis in the IA only used the benchmark and
the -10 p.p. scenario for the estimation of potential future benefits and cost excess reductions. This was
also translated towards potential GDP and employments as described in the above steps and
calculations. This second scenario anticipates a potential overestimation. The different scenarios of
associations that could consider operating cross-border in the event of sufficient policy intervention are:
Scenario 1: Benchmark (60%) 185 000 (SCENARIO A)
Scenario 2: -5p.p. (55%) 170 500
Scenario 3: -10p.p. (50%) 155 000 (SCENARIO B)
Scenario 4: -15p.p. (45%) 139 500
151
Below, scenario A and B are translated into a series of policy uptake ranges ‘unlocking potential’. In
the IA (Section 6) this is adapted to a 5 p.p. upper and lower bound starting from the central estimates.67
Table 27: Estimated economic benefits regarding the unlocking potential of cross-border activity of associations
(scenario A)
Estimated benefits
Scenario A
(60% increase)
Additional n. of
cross- border
associations
Additional
annual GDP
(after complete
uptake)
€bn
Additional
employment
50% - 60 % policy
uptake
93 000 – 112 000 2.1 - 2.5 38 000 – 46 000
60% - 70 % policy
uptake
112 000 – 130 000 2.5 - 2.9 46 000 – 53 000
70% - 80% policy
uptake
130 000 – 149 000 2.9 - 3.4 53 000 – 60 000
80% - 90% policy
uptake
149 000 – 167 000 3.4 - 3.8 60 000 – 68 000
Maximum potential of
policy intervention
(100%)
185 000 4.2 75 000
Table 28: Estimated economic benefits regarding the unlocking potential of cross-border activity of associations
(scenario B)
Estimated benefits
Scenario B
(50% increase)
Additional n. of
cross- border
associations
Additional
annual GDP
(after complete
uptake)
€bn
Additional
employment
50% - 60 % policy
uptake
78 000 – 93 000 1.8 - 2.1 32 000 – 38 000
60% - 70 % policy
uptake
93 000 – 108 000 2.1 - 2.4 38 000 – 44 000
70% - 80% policy
uptake
108 000 – 124 000 2.4 - 2.8 44 000 – 50 000
80% - 90% policy
uptake
124 000 – 140 000 2.8 - 3.1 50 000 – 57 000
67
Consequently the range in the IA for PO1 and PO3 (90% central estimate) is differently applied than the
theoretic tables show below. In the IA the range is set at 85% and 95% as the central estimate is 90%. For PO2
the range is the same as shown in both table: 80%-90%.
152
Maximum potential of
policy intervention
(100%)
155 000 3,5 63 000
3.3.Costs of launching and running cross-border operations
Cost of launching
Registration costs
In the current legal and policy framework, most operations across borders require associations to set up
their operations in the other Member State. This requires familiarisation with the national requirements,
the set-up of a correct legal form and registration in the country where the associations wishes to expand.
Data on registration costs were gathered across Member States through the legal analysis and dedicated
desk research. These costs represent direct one-off costs and vary considerably across countries. In
order to estimate the typical cost of registration for associations across the EU, a weighted average was
applied, by taking into account each country’ share of associations out of total EU. In particular, the
following formula was applied:
Typical registration cost = ∑ Registration cost (𝑖) ∗ Share of associations out of total EU (𝑖)
𝑛
𝑖
i = Member State 1, Member State 2…. Member State n
Table 29: Registration costs.
Member state Registration fee Digital registration Average
(registration fee
and digital
registration)
Share of
associations out
of total EU
Austria EUR 35 Available EUR 35 3.4%
Belgium EUR 187 EUR135 EUR 161 3.6%
Bulgaria EUR 25.6 EUR 12.8 EUR 19.2 0.5%
Croatia n/a 1.4%
Cyprus EUR 50 EUR 50 0.1%
Czech Republic EUR - Available EUR - 3.3%
Denmark n/a 2.6%
Estonia EUR 30 Available EUR 30 0.6%
Finland EUR 180 EUR 50 EUR 115 2.8%
France EUR - EUR - 33.8%
Germany EUR 7468
Not possible EUR 74 16.0%
Greece n/a 0.1%
Hungary EUR - Available EUR - 1.0%
Ireland n/a 0.8%
Italy EUR 300 EUR 300 8.0%
Latvia EUR 11.4 EUR 10.2 EUR 10.8 0.6%
68
A registration fee of 74 euro needs to be paid to the register of associations (Vereinsregister), which is
administrated by the local courts (Amtsgericht) within the jurisdiction of each federal state. The law of many
federal states rules that associations with tax-privileged status are exempt from the registration fee. The
details, however, differ.
153
Lithuania EUR 18.8 EUR 12.0 EUR 15.4 0.2%
Luxembourg EUR - EUR - 0.2%
Malta EUR 35069
EUR 350.0 EUR 350 0.0%
Netherlands EUR 52.0 EUR 52.0 3.3%
Poland EUR - Available EUR - 1.7%
Portugal EUR 300.0 EUR 300 1.7%
Romania n/a 1.2%
Slovakia EUR 66.0 EUR 66.0 1.3%
Slovenia EUR 31.7 Not possible EUR 31.7 0.6%
Spain EUR 38.9 EUR 38.9 6.9%
Sweden70
EUR 143.4 EUR 116.6 EUR 130 4.2%
Weighted EU
average
EUR60
In order to estimate the lower and upper bounds, lowest and highest cost values were used, with the
minimum being 0 (in various Member States) and maximum being EUR 300 – EUR 50 (e.g. Italy and
Malta). Notable exceptions have to be noted, where registration fees depend on the value of
associations/foundation's assets and can exceed EUR 1000 (e.g. Malta), or notarial deeds are prescribed
by the law for specific cases (e.g. BE for INPAs, ranging EUR 200-2,500). Being exceptional cases,
these were treated as outliers and excluded from the average computation of typical registration costs.
As noted, registration requirements differ considerably across countries. For instance, some countries
offer the possibility to register electronically, generally at lower fees. Also, some countries mandate the
payment of registration and notary fees, while other offer registrations free of charges. For more detail
information on requirement per country, please refer to Section 3 in the IA.
Set-up cost
Besides registration, set-up costs were further broken down into: internal staff (compliance costs) and
external advisory costs (direct costs). These costs represent one-off costs. In fact, most operations
across borders require associations to set up their operations in the other Member State, requiring staff
familiarisation with the national requirements and preparation for the set-up of a correct legal form.
Most associations also consult legal or tax advisory support for the establishment.
Costs of staff and external providers differ significantly depending on the local economic circumstances
and requirements. The estimates thus provide an indication of what can be expected and must not be
taken as exact cost structures for any association across the EU. The numbers presented the report reflect
estimates based on best estimate techniques using a combination of publicly available statistics, survey
and interview responses and extrapolation techniques. The exact numbers must therefore be interpreted
with the necessary care. This note applies to all estimates discussed hereafter.
Internal staff costs (compliance costs)
For internal staff costs, primary data collection (targeted survey and in-depth interviews) provided a
basis for assessment. In particular, associations already acting cross-border were asked the following
question, to be answered either in number of days or percentage of annual FTE:
- How much time did your staff spend on preparing the expansion of operations into another
Member State?
69
Registration fees depend on the value of associations/foundation's assets and can exceeds EUR1,000. For
calculations the lower bound was used, to reflect typical small size of associations
70
For calculations fees were used foreseen for associations willing to conduct economic activities. There is no
registration requirement, unless the association wishes to conduct economic activities.
154
In order to estimate the typical time spent by internal staff to expand cross-border, an average was
applied, both to responses from the survey and interviews, which led to similar results. In particular,
according to the targeted survey of the IA study, associations require their own staff to spend between
9-20% of an FTE to organise the establishment of operations in another Member State (15% on
average). This entails one off costs for staff to familiarise with the legislation in the new country, as
well as to check, prepare and conduct the administrative formalities required by the country where the
associations intend to expand. To translate time spent (in % of annual FTEs or number of days) into
monetary cost, the Eurostat Structure of earnings survey and the Labour Force Survey data for Non-
Wage Labour Costs were used, to account for differences across countries in labour costs. Data on these
costs are presented in the table below.
155
Table 30: Hourly Earnings 2018 + Non-Wage Labour Costs (NWLC)+ 25% Overheads (OH).
MS
ISCO 1 ISCO 2 ISCO 3 ISCO 4 ISCO 5 ISCO 6 ISCO 7 ISCO 8 ISCO 9 ISCO 1-5
ISCO 7-
9
MS
Average
Hourly
Income
2018 +
NWLC
+ OH
Legislators,
senior
officials
and
managers
Professionals Technicians
and associate
professionals
Clerks Service
workers
and shop
and
market
sales
workers
Skilled
agricultural
and fishery
workers
Craft
and
related
trades
workers
Plant and
machine
operators
and
assemblers
Elementary
occupations
Non-
manual
workers
Manual
workers
BE 64.7 50.4 35.0 27.6 23.6 n/a 26.5 27.0 21.6 36.0 23.7 33.0
BG 11.3 7.2 6.1 4.2 3.0 3.0 4.2 3.8 2.9 5.8 3.6 4.9
CZ 25.7 17.1 14.1 10.6 8.6 7.9 10.8 10.0 7.3 13.9 9.8 12.2
DK 74.1 50.2 47.7 39.4 32.4 36.1 42.6 41.5 34.0 44.4 38.2 43.0
DE 75.0 46.8 35.3 29.0 21.4 24.5 29.5 26.0 18.2 35.0 24.3 31.5
ET 21.0 16.9 13.8 11.0 8.2 9.1 11.7 10.7 7.9 13.8 10.2 12.6
EI 50.1 48.1 34.9 27.1 21.2 21.7 25.8 25.6 20.4 36.7 23.4 33.8
EL 31.7 21.7 17.6 14.2 11.0 11.3 15.2 14.6 10.1 17.1 12.6 16.0
ES 41.0 29.6 23.5 18.3 14.8 15.2 17.9 18.8 14.0 22.4 16.5 20.4
FR 58.7 44.1 33.9 26.3 24.9 24.0 26.6 26.7 22.4 37.0 25.1 33.7
HR 18.3 13.6 10.4 8.9 6.9 6.4 7.3 7.8 6.0 10.5 7.0 9.4
IT 74.4 42.4 30.5 24.1 19.0 20.1 20.9 22.1 17.8 30.5 20.0 27.1
CY 48.0 25.8 19.0 12.7 10.1 9.7 13.7 12.9 9.5 19.2 11.4 17.1
LV 17.7 13.6 11.0 8.6 6.5 6.8 8.9 8.6 6.0 11.4 7.7 10.1
LT 16.0 11.8 8.9 7.6 6.0 5.7 8.0 7.8 5.4 10.6 7.3 9.3
LU 69.5 46.0 37.5 29.6 23.8 22.4 25.3 24.0 20.2 41.9 23.0 35.3
HU 17.2 12.2 8.8 7.9 5.9 5.7 7.3 6.8 4.9 10.1 6.3 8.5
MT 27.1 20.3 17.0 13.6 12.1 10.8 13.8 13.3 9.9 17.3 11.6 15.8
NE 56.1 41.8 33.5 27.1 21.6 22.4 26.7 25.8 17.3 32.9 22.0 30.0
AT 62.2 42.2 33.9 28.0 20.9 n/a 26.5 25.7 19.8 32.8 23.9 29.6
PL 17.7 13.2 9.3 7.4 5.8 5.7 7.4 7.3 5.5 11.1 7.0 9.6
156
PO 30.1 20.8 14.9 10.2 8.0 7.4 8.5 8.4 7.1 14.3 8.0 12.1
RO 15.8 12.9 8.4 6.4 4.9 4.8 6.1 5.8 4.6 9.8 5.5 8.0
SL 30.4 19.5 16.1 12.8 10.2 10.7 11.7 11.1 9.1 16.4 10.7 14.2
SK 22.0 14.3 12.6 9.7 8.1 7.1 10.5 9.8 7.1 12.7 9.4 11.4
FI 68.9 41.0 32.1 26.3 23.9 22.2 27.9 28.0 21.2 33.6 25.9 31.6
SE 63.3 43.1 39.7 31.3 30.1 28.8 35.0 34.0 26.7 38.8 32.4 37.4
EU 47.8 35.6 29.6 23.7 18.6 21.0 21.4 19.1 16.1 28.9 18.8 25.7
157
To calculate the average FTE annual cost across the EU, the following formula was used:
𝐸𝑈 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 ℎ𝑜𝑢𝑟𝑙𝑦 𝑖𝑛𝑐𝑜𝑚𝑒 (EUR 25.7) ∗ 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑤𝑒𝑒𝑘𝑙𝑦 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 ℎ𝑜𝑢𝑟𝑠71 (36.4) ∗
𝑁. 𝑜𝑓 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑤𝑒𝑒𝑘𝑠 (52) = 48 700
Simple average FTE annual cost was also checked against a weighted average considering the share of
each country of the total estimated international FTEs employed by associations, showing comparable
results.
∑ Average hourly income cost (𝑖) ∗ Share of international FTEs out of total EU (𝑖)
𝑛
𝑖
i = Member State 1, Member State 2…. Member State n
Total internal staff costs to prepare and implement expansion cross-border were calculated as follows:
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐹𝑇𝐸 𝑎𝑛𝑛𝑢𝑎𝑙 𝑐𝑜𝑠𝑡 (EUR 48.7𝑘) ∗
𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑖𝑚𝑒 𝑠𝑝𝑒𝑛𝑡 𝑏𝑦 𝑖𝑛𝑡𝑒𝑟𝑛𝑎𝑙 𝑠𝑡𝑎𝑓𝑓(𝑖𝑛 % 𝑜𝑓 𝑎𝑛𝑛𝑢𝑎𝑙 𝐹𝑇𝐸, 15%) ∗ 𝐶𝑟𝑜𝑠𝑠𝑏𝑜𝑟𝑑𝑒𝑟 𝐹𝑇𝐸𝑠
(126 800)= EUR 930 m
External advisory costs (direct costs)
Most associations also consult legal, accounting or tax advisory support for the establishment. For
external staff costs, primary data collection (IA study targeted survey and in-depth interviews) provided
a basis for the assessment.
In particular, according to the targeted survey and interviews conducted, associations spend on average
EUR 2,650 in external advisory cost to support their expansion cross-border, corresponding to a total
of EUR 820 m spent on such services by current cross-border associations.
Therefore, it is estimated that a total setup costs for associations currently operating cross-border
(~310 000) is around EUR 1.7 bn (EUR 820 m direct costs + EUR 930 m compliance costs)
Overview of the estimated typical cost of launching operation cross-border, per association
No policy option is expected to eliminate all costs in their entirety, as some of these will remain.
Therefore, it is important to distinguish between different cost items. When referring to cross-border
costs, the total cost consists out of two main blocks:
- Costs that are fixed and cannot be reduced by policy intervention
- Excess cost: cost that exist (or potentially exist) due to non-harmonisation and can
potentially be avoided by policy intervention.
When looking at cost for the launch of operation, for already existing cross border associations these
can also be called opportunity cost, but excess cost also represent a barrier to entry. Therefore, cost
reductions do not necessarily equal ‘cost savings’ as these cost blocked off an entry rather than are
71
https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Hours_of_work_-_annual_statistics
158
being reduced. It is therefore not possible talk about ‘cost savings’ and need to talk about reduction of
‘excess cost’.
Moreover, internal costs are expected to benefit the most from potential lifting of barriers, as external
advisory services are still expected to be somewhat relevant in order to conduct cross-border operations
(e.g. advisory on labour, accounting and tax laws in countries where associations wish to expand).
According to insights collected from stakeholders consulted, in the best scenario with policy
intervention setup, costs can be expected to be reduced by up to 25% (external services) and 50%
(internal costs). This led to estimating the excess costs at EUR 670 m72
, which is unnecessary cots spent
by associations due to the unresolved problem. Looking at individual associations, a new association
willing to expand cross-border could save up to a maximum estimated ~EUR 2,150 in case of policy
intervention, compared to the current situation, where there are excessive (unnecessary) cost due to the
unresolved problem.
Table 31: Breakdown of costs of establishment of cross-border operations for a typical association.
One-off costs of launching cross-border
operations for a typical association
Current cost (best
estimate)
Current excessive
cost73
New cost (without
excessive cost)74
Staff cost
(time spent to familiarise with legislation, check
and prepare admin formalities)
~ EUR 3 000 ~ EUR 1 500 ~ EUR 1 500
Other setup costs (external services +
registration costs)
~ EUR 2 650 ~ EUR 650 ~ EUR 2 000
Total ~ EUR 5 650 ~ EUR 2 150 ~ EUR 3 500
Source: Estimates based on targeted survey and in-depth interviews in the IA study
When applying the scenarios for potential new associations developed in table 27 and 28 to the potential
excess launch cost reductions (a full reduction of the excess cost of EUR 2 150 for PO1 and PO3 and a
partial reduction of the excess cost of EUR 1 850 for PO2) the total excess cost reduction for launching
operations can be calculated for each of the policy options over a time span of 15 years. The table below
also adds upper and lower bounds for each policy option (+/- 5 p.p. to the central estimates of policy
uptake: 75% for PO1 and PO2 and 90% for PO3):
Table 32: Excess launch costs – scenario A75
:
72
Calculated as 50% of total staff cost + 25% of total external services.
73
Excess cost are defined as the unnecessary cost which could be avoided by solving the problem. These need to
be distinguished from the actual cost which include also the unavoidable component of the cost category.
74
Difference between previous two columns.
75
Figures are rounded. Source IA study.
Excess launch costs (15
years) reduction
Potential new
associations
Excess cost reduction Excess cost reduction
SCENARIO A EUR 2 150 PO EUR 1 850 PO
159
Table 33: Excess launch costs – scenario B76
:
3.4.Costs of operating cross-border
For those associations overcoming the barriers to operate cross-border, the current framework requires
to allocate resources to compliance activities and administrative burden that might be avoidable. Cost
of operating cross-borders may vary greatly depending on various factors, particularly linked to country
specificities (e.g. specific national regulatory framework, costs of external services etc.) and the size
and types of activity of the associations. Moreover, the factor whether an association is active in two or
more Member States plays a role. Typical costs reported in the OPC, the targeted survey and interviews,
consist of staff dealing with cross-border complexity and external services, including legal, accounting
and tax advisory services faced by associations to run operations in another Member States.
Therefore, costs of operating cross-border were broken down into internal staff costs dealing with cross-
border complexity and external costs for advisory services. Internal staff costs were further broken
down into information and compliance costs. There represent recurring costs to be borne annually by
associations to operate cross-border.
76
Figures are rounded. Source IA study.
Uptake % policy option
70% 130 000 EUR 278 million PO1 EUR 240 million PO2
80% 149 000 EUR 318 million PO1 EUR 274 million PO2
85% 157 000 EUR 338 million PO3
95% 176 000 EUR 378 million PO3
100% 185 000 Maximum potential scenario B
Excess launch costs (15
years) reduction
Potential new
associations
Excess cost reduction Excess cost reduction
SCENARIO B
Uptake % policy option
EUR 2 150 PO EUR 1 850 PO
70% 108 000 EUR 233 million PO1 EUR 201 million PO2
80% 124 000 EUR 267 million PO1 EUR 229 million PO2
85% 132 000 EUR 283 million PO3
95% 147 000 EUR 317 million PO3
100% 155 000 Maximum potential scenario B
160
The main source of information for the assessment of these costs was primary data collection, via the
targeted survey and in-depth interviews, which also focused on costs assessment. Costs were also
assessed against available secondary data.
Internal staff costs
For internal staff costs, associations already acting cross-border were asked the following question:
How much time do you or your colleagues spend per year on administrative tasks to be active in that
other Member State (i.e. tasks needed to support/ enable the running of the actual operations of your
association)?
Associations surveyed reported typically between 4% and up to 30% (in some cases they report however
even more than 100%) of an FTE for managing their cross-border activities. In order to estimate the
typical time spent by internal staff to deal with cross-border complexity, an average was applied to
responses from the survey and triangulated with interviews results, leading to 17%.
To translate time spent into monetary cost, the average FTE annual cost for the EU was used (as
described above).
The average time spent by internal staff of 17% (in % of annual FTE) for all associations currently
acting cross-border translates into monetary recurring costs for internal staff dealing with cross-border
complexity (information and compliance costs) of ~EUR 1.08bn.
Notably, the following formula was applied:
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐹𝑇𝐸 𝑎𝑛𝑛𝑢𝑎𝑙 𝑐𝑜𝑠𝑡 (EUR 48 700) ∗
𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑖𝑚𝑒 𝑠𝑝𝑒𝑛𝑡 𝑏𝑦 𝑖𝑛𝑡𝑒𝑟𝑛𝑎𝑙 𝑠𝑡𝑎𝑓𝑓(𝑖𝑛 % 𝑜𝑓 𝑎𝑛𝑛𝑢𝑎𝑙 𝐹𝑇𝐸, 17%) ∗
𝐶𝑟𝑜𝑠𝑠𝑏𝑜𝑟𝑑𝑒𝑟 𝐹𝑇𝐸𝑠(126 800)= ~EUR 1.08 bn
These internal staff running costs were further broken down into two main components, namely
information and compliance costs. This was done applying the following shares, which emerged as
typical based on interviewed stakeholders:
Share of staff dealing with understanding
(admin burden)
Share of staff dealing with compliance
(compliance costs)
65% 35%
Total staff costs dealing with understanding Total staff costs dealing with compliance
65%*EUR 1.08 bn = EUR 00 m 35%*EUR 1.08 bn = EUR 78 m
External advisory services (recurring costs)
On top of internal staff costs, there are also annual legal, accounting, tax or other advisory services that
associations require. For external advisory services, associations already acting cross-border were asked
the following questions:
- Do you require any of the following services to run your operation in another EU Member
State: Legal advisory, Accounting services, Tax advisory, Other services (please specify)?
- If yes, please provide an estimate of the annual costs of these services?
Costs for such annual external services reported in the IA study targeted survey to associations typically
range between EUR 1 000 and EUR 10 000 depending on the Member States of operation and the
specific needs of the association. On average, external services costs for a typical association amounts
to an estimated EUR 2 900 annually. This corresponds to a total spending for external services of
161
~EUR 920 million. Calculations were based on the typical association, thereby excluding costs of very
large associations that would skew the estimates. The following formula was applied:
Total external advisory services costs (recurring costs) = Average cost per association (EUR 2 900)
* Number of CB associations (310 000) = EUR 920 m
Costs for external services were also checked against available secondary data77
, to compare the
estimated ranges. This source indicates average running expenses for external counselling related to
international activities to be ~EUR 3 000, which are very similar to our estimate (i.e. EUR 2 900)
Similarly for setup costs, recurring operational costs can be expected to be reduced by up to a maximum
of 25% (external services) and 50% (internal costs) in the event of policy intervention, which are
identified as excess costs due to the unresolved problem. Abolishing these excess costs to the full
potential would lead to annual cost savings of ~EUR 770 million78
for associations currently acting
cross-border.
Table 34: Costs of operating cross-border for a typical association.
Costs of cross-
border operations
for a typical
association
Current cost Current excessive cost New cost (without excessive cost) 79
Staff costs
(information and
compliance costs)
~ EUR 3 500 ~ EUR 1 750 ~ EUR 1 750
External services ~ EUR 2 900 ~ EUR 750 ~ EUR 2 150
Total ~ EUR 6 400 ~ EUR 2 500 ~ EUR 3 900
Source: Estimates based on targeted survey and in-depth interviews IA study
4. Impacts of policy options
The impacts of policy options were assessed in five stages:
1. Identification of potential impacts
2. Selection of expected impacts
3. Qualitative assessment of impacts
4. Quantification of expected significant impacts
5. Validation of estimates
4.1.Identification of potential impacts
Starting point for the identification was the list from the Better Regulation guidelines. Based on the
stakeholder consultations (e.g. interviews, survey, public consultation) and available literature the IA
study selected those impacts that are potentially seen to be directly, indirectly or in induced form related
to possible policy interventions. In particular, in the IA study it is indicated which impact categories are
77
CSI, Feasibility Study on a European Foundation Statute
78
Calculated as 50% of total staff cost + 25% of total external services.
79
Difference between previous two columns.
162
directly expected to emerge from policy options and which may be impacted through the functions of
associations.
This screening was important to ensure that the subsequent assessment focused on the most important
impacts for each specific policy options.
4.2.Selection of expected impacts
Using the identified possible impacts and the analysis of the problem, the IA study established a theory
of change illustrating the expected causal relationship between the expected impacts. The theory of
change distinguished between the two stakeholder groups that are intended to be directly affected
by policy options, namely:
- Associations acting cross border
- Associations interested in acting cross border and
- those that may be unintentionally directly affected:
o Associations not interested in expanding cross border
o Competent authorities
Key impacts that are intended to be indirectly achieved (e.g. generation of GDP, employment, freedom
of establishment) and those that may be induced through the operations of associations were
highlighted, as illustrated below.
163
Figure 2: Direct and indirect impacts – Theory of Change.
164
4.3.Qualitative assessment of impacts intensity
The qualitative assessment of impacts is based on a triangulation of the legal analysis, feedback from
consultations and an assessment of the theory of change. Based on this, for each of the policy options
and expected impacts a weighting on how strong the potential of each policy option is expected to be
in generating such impact was established. The use of ‘potential’ in this analysis refers to the approach
that each policy option contains a significant level of uncertainty in its final scope, form of
implementation and uptake. Therefore, the assessed impact potential needs to take into account what
can be considered ‘reasonable’ based on other similar initiatives related to the integration of the Single
Market, as described above.
Feedback from the survey and interviews was used to assess the effectiveness of each policy option in
addressing existing barriers (Note: the survey asked respondents to score the effectiveness of each
policy option). These findings were then quality checked against the legal analysis. The potential impact
of each policy option was therefore qualitatively assessed, according to a five levels classification:
Impacts on adjusting existing barriers
Low
Low - medium
Medium
Medium - High
High
4.4.Quantification of expected significant impacts
Impacts on adjusting barriers to entry
For the quantification of expected significant impacts, it was needed to translate the qualitative
assessment into quantitative terms. To assess the impacts on the number of new cross-border
associations and related additional GDP and employment resulting from adjusting existing barriers to
entry ranges were applied presented in the table below. It must be noted that each policy option is
expected to have some positive impact even if limited. Therefore, a low impact was translated into >0%,
namely an up to 10% effect. At the same time, none of the policy options is likely to address all barriers,
so the highest impact potential was estimated to lead up to 90%. The percentages for the remaining
three levels were chosen based on the scoring in the survey and qualitative judgement emerging from
the interviews as well as triangulation with the legal analysis. These shares were applied based on other
similar initiatives related to the integration of the Single Market, as described above.
Table 35: Potential impacts on adjusting existing barriers to enter (scale)
Potential impacts on adjusting existing barriers to enter Potential to adjust existing
barriers
Low 10%
Low - medium 25%
Medium 50%
Medium - High 75%
High 90%
As explained above, a potential policy change lifting barriers for cross border operations of associations
can be assumed to be a progressing development over a period of time. To define the time duration,
recent experience from similar policy intervention aimed at strengthening the Single Market was used.
Data on companies’ trade in services were used as proxy for associations, as associations mostly provide
services, as indicated by stakeholders consulted and confirmed by available literature. Therefore, data
165
form the Single Market report was used as a proxy to estimate the potential impact on associations from
further integration of the Single Market, if some of the barriers were lifted through policy intervention,
assuming they are likely to experience a similar impact over a similar timespan of 15 years.
For each policy option, the related potential (in %) to address existing barriers was used to calculate the
maximum number of cross-border associations and related GDP and employment that could be
unlocked by the policy option (applied to the maximum estimated above, namely 185 000 associations,
75 000 new employees and additional contribution to the GDP of their international activities of
EUR 4.2 bn).
Impacts on excess cost reduction
To assess the potential of the different policy options in reducing setup and operations costs of acting
cross-border, in the IA study ranges presented in the table below. In assessing the potential impacts of
the different policy option on these costs, distinguished answers were:
- Associations active in one Member States but willing to go cross-border. Impacts on these
associations mainly relate to setup costs
- Associations already active cross-border. Impacts on these associations relate to both setup
(based on past experience) and operating costs.
As indicated by consulted stakeholders, no policy option is expected to eliminate all costs in their
entirety, as some of these will remain. Moreover, internal costs are expected to benefit the most from
potential lifting of barriers, as external advisory services are still expected to be somewhat relevant in
order to conduct cross-border operations (e.g. advisory on labour, accounting and tax laws in countries
where associations wish to expand).
Table 36: potential impacts on cost reduction (per cost type)
Potential impacts on
cost reduction
Potential cost reductions
Internal
setup costs
External
setup costs
(advisory)
Internal
running costs
(information)
Internal
running costs
(compliance)
External
running
costs
(advisory)
No impact / reduction 0% 0% 0% 0% 0%
Low 10% 5% 10% 10% 5%
Low - medium 20% 10% 20% 20% 10%
Medium 30% 15% 30% 30% 15%
Medium - High 40% 20% 40% 40% 20%
High 50% 25% 50% 50% 25%
Also, it is not likely to expect effects on excess cost reduction to materialise from year 1. For each
policy option, the IA study can assume a lag effect of 1 year where no effects can be observed, due to
the time to effectively implement the appropriate policy intervention and produce the desired effects on
relevant stakeholders. Therefore, starting from year 1, the IA study expects a linear increase from the
current situation to the full cost reduction potential until year 5. As of year 5, the IS study expects the
policy intervention to be fully effective and to produce the maximum expected results.
4.5.Validation of estimates and discussion of results
The final estimates generated were compared to the overall GDP estimates and typical cost structures
to assess their reliability. Moreover, for the IA study literature was compared. Although the estimates
developed follow a logical set of assessment steps integrating both primary and secondary data and
have been cross validated and contextualised, absolute conclusions from the numbers must be treated
with care. As stated above, these are estimates on the expected potentials. The extent to which such
166
potentials can be unlocked will depend on the final specifications of policy measures as well as the take
up of Member States and local and regional authorities and ultimately on the individual decisions taken
by representatives of associations. As the impacts are usually the result of behavioural choices of
economic operators based on a bundle of combined various individual drivers, a mathematical
deduction of final conclusions is particularly challenging.
167
ANNEX 5
COMPETITIVENESS CHECK
1. Overview of impacts on competitiveness
Dimensions of competitiveness Impact of the
initiative (++ / +
/ 0 / - / --/ n.a.)
References to sub-sections of
the main report or annexes
Cost and price competitiveness + Section 6.3
Capacity to innovate + Section 6, introduction.
International competitiveness 0 NA
SME competitiveness + Section 2.3
Section 6.3
Annex 7
2. Synthetic assessment
a. Cost and price competitiveness
The preferred option is expected to increase the competition in markets where associations
provide comparable goods and services with other market players. The competitiveness of
associations should improve as they will be able to operate across borders while facing a
reduced administrative burden.
The preferred option is expected to reduce the excess costs of operating cross border and to
lower the threshold for associations to launch cross border operations. This has two main
effects:
1. Associations with cross border activities have more time and financial resources
available for their core activities (economies of scale)
2. More associations will provide their offer cross border, which increases the quantity in
sectors associations are operating (e.g. health-, care- and social services, social work,
work integration, training and education and services to households) and thus increases
competition on quality and price.
Annex 3 provides a detailed overview of the excess cost reductions, as well Section 6, 7 and
8 of the Impact Assessment (IA).
b. Capacity to innovate
Positive effects on the capacity to innovate80
may emerge due to more resources available,
easier access to cross-border research and projects, mostly relevant to sectors such as health-,
care- and social services, social work, work integration, social housing, training and education.
80
https://link.springer.com/article/10.1007/s11301-022-00297-2 and European Commission study on cross border
activities of the social economy (2023).
168
A facilitation of cross border activities can have positive result in terms of innovation capacity
of associations:
• innovation transfer: increased cross-border partnerships, sharing and uptake/access to
(social) innovation applications;
• joint innovation undertakings (transnational/cross border), for example engaging in
cross border partnership in an interregional context (e.g. cross border clusters
developing R&D in assistive technologies supporting workers and residents in elderly,
child/disability care);
• cost savings allow more investment for (social) innovation (intra organisational)81
;
• improved access e.g. to (social) innovation skills, education and training offer, as well
as skills alliances82
and opportunities for staff.
c. International competitiveness
The initiative has no impact on international competitiveness of associations. This does not
exclude positive secondary effects, which are not assessed here as non-relevant.
d. SME competitiveness
As most associations can fall under the definition of SMEs, the initiative thus captures SMEs.
Albeit, due to costs and administrative burden, most SME size associations are hampered to
operate across borders in the single market. Mostly larger associations are usually organised
under the form of an international NGO or NPO with capacity to overcome these barriers. Still
evidence from the IA study showed that also smaller associations have interest and drivers to
operate across borders. This might suggest that the positive impact on SME associations might
be bigger than on larger associations, as the “relative burden” in terms of costs and
administration, but also other barriers (e.g. language, capacity) is higher. Consequently, SME
size associations might be more likely to operate across borders when the existing barriers are
lowered.
The preferred option is expected to enhance services and goods flows within the single market
and enhance the competitiveness of associations acting cross-border within the EU. Easier
access to the single market for offering goods and services, as well as setting up new branches,
mergers and other ways of organisational scaling (e.g. social franchising models).
81
For example in the sector of sheltered workshops etc. (Today mostly transformed into work integration). The
largest ones are operating in several countries and are organized in international innovation projects. They
operate like traditional business be it under an association legal form (or coop or foundation depending on
the countries traditions).
82
Associations active in work integration are developing an EU skills alliance with a focus on shared digital
innovations and technologies. B-WISE | Skills for the future : WISEs ready ! (bwiseproject.eu)
169
ANNEX 6
MARKET CONTEXT
As explained in Section 1.4 of the Impact Assessment report, the aim of this Annex is to provide
more detailed evidence and figures to support the market context in which associations operate in
the EU including when activities are performed across borders in the single market and showing
the sectors in which they appear to be commonly active.
Box 1: Treatment of data constrains on associations in the market context
The analysis in this Section of the IA is challenged by the minimal availability of recent, qualitative and
relevant data on associations at EU and Member State level.
Producing quantitative data on associations at EU level is difficult for the following reasons: (i) absence
of official statistics gathering data on associations (beyond registration) at Member State and EU level,
(ii) economic indicators are usually not collected in traditional business statistics at Member State and
EU level, with the exception of sectoral satellite accounts, ad-hoc research projects or databases of
private federations and sectoral actors, (iii) lack of harmonised definitions and different traditions of the
non-profit sector and different registration requirements in the Member States (e.g. Orbis database does
not allow to distinguish organisations that could be defined as associations), and (iv) comparative studies
at EU level are scarce and limited in economic indicators.
The IA (Section 1.4 and Annex 4) is informed by the two following existing studies, mostly using the same
input data (2014-2015): (i) a study from the European Economic and Social Committee on recent
evolutions in the social economy and (ii) a study performed for the UN on the size and scope of the EU
Third sector.
Basic data on the number of associations presented in this IA can be considered robust, as building on
available and recent official data for most Member States; and as half of the Member States have recent
data available in terms of associations employment and contribution to the GDP. However, when it
comes to other economic indicators such as size of the organisation, sectoral presence and cross border
activities, data on associations is often outdated or completely missing for most Member States. Data in
European databases such as Eurostat (e.g. Structural Business Statistics) or ORBIS do not allow to
disaggregate data on at EU level. Sectoral data or specific data on social economy, the third sector,
NPOs, NGOs, CSOs, etc. are available and used where appropriate, but they do not represent
disaggregated data specific to associations, e.g based on the legal form. In addition, there are no recent
comparative studies on associations.
Consequently, data about cross-border activities of associations is mostly absent (specific data on
internationalisation and cross-border activities of associations is available for only four Member States
(Germany, Austria, Italy and Estonia). Estimates in the IA regarding associations operating cross-
border are, therefore, based on theoretical assumptions, analogies and benchmarking (e.g. parallels with
similar sectors and activities), allowing extrapolations of input data available (Annex 4 provides for a
detailed overview on how each estimate is calculated and for which data points theoretical assumptions
had to be made). It is important to note that these data points may present a risk of overestimation. As
170
mitigation measures, the analysis underpinning this IA builds on the lower bound estimates and
complements with qualitative information (based on literature review as well as interviews and a
targeted survey, as outlined in Annex 2) in order to further support the quantitative methodology. More
details on the methodology are provided in Annex 4.
1. Socio-economic impact of associations in the EU
Based on the methodology of this IA, an estimate of 3.87 million associations operate in the EU,
representing about 86,8% of NPOs.83
Data from the IA study suggests that the economic
contribution of associations to the EU GDP amounts to EUR 420 billion (i.e. 2.9% of EU GDP).84
In terms of job creation, associations are employing about 5% of the European labour force (8.8
million employees).85
More recent data on share of employment exist for some Member States
(France 9,7%, Belgium 12%, and The Netherlands 13%).86
Taken on individual basis, associations have typically limited resources in terms of budget and
staff. The combined evidence on number of employees and annual income suggest that a large
majority of the association can likely be considered to be SMEs87
, in particular micro enterprises.88
Their main revenue sources are market sales, membership fees, public funding (including public
procurement contracts), grants and donations, though in different mix across different Member
States.
83
In some Member States, such as Germany and Sweden, associations are the most predominant legal form among
NPOs (i.e. about 75% of NPOs registered as associations in Sweden and, 90% in Germany in 2022) while France
has the highest absolute number of associations among Member States (i.e., 1.3 million of associations in 2022
on a total of 1,5 million NPOs).
84
Figure considered as robust. Official and recent data for GDP contribution of NPOs is available for 22 Member
States. For the missing data points of EE, CY, EL, NL and IE estimates have been developed. The estimate for
GDP contribution of associations is deducted from the collected data for NPOs. For a detailed overview see Annex
4 (section 2.2).
85
Figure considered as robust. Estimated based on recent sources for 16 Member States combined with an EU
comparative study: The Size and Composition of the European Third Sector, Lester M.Salamon and Wojciech
Sokolowski, 2018 (figures for associations and foundations. UK and Norway are excluded from the calculations).
These figures are also confirmed by the EESC study on Recent Evolutions of the Social Economy in the European
Union, 2016. For a detailed overview of the calculations, see Annex 4 (section 2.3).
86
See Annex 4, Section 2.3
87
Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized
enterprises. See Article 1: “An enterprise is considered to be any entity engaged in an economic activity,
irrespective of its legal form. This includes, in particular, self-employed persons and family businesses engaged
in craft or other activities, and partnerships or associations regularly engaged in an economic activity.”
88
As indication, in France 96% of associations do not have any employees, while this share is lower in Germany,
where 7% of associations employ at least 50 people. IA study.
171
Figures showing the share of non-profit associations with non-economic (disinterested) activities
versus economic activities are not available.89
This is because associations have often a mixed
portfolio of economic and non-economic activities, while revenue from economic (commercial)
activity is used to fulfil the activities related to the statutory mission. So called “hybrid
associations” became more common, since the emergence of the social enterprise model in the last
decade, e.g. encouraged by the Social Business Initiative of 2011. A conversion from a primarily
state-supported to a hybrid form of non-profit association saw a surge due to gradual phasing out
of state support after an economic crisis and as a result of austerity policies.90
Given the lack of
data, we consider indirect indicators to capture the economic activities and relevance of
associations.
Figure 1: European Third sector revenue structure in 29 countries, 201491
First, the revenue sources can give a good understanding. Figure 1 above shows figures for the
third sector in the EU92
(mainly composed of associations and foundations, around 86.8% are
associations), where private fees and market income (including private payments for goods and
89
For the purposes of this IA, economic activities refer to those that are remunerated, whereas non-economic activities
refer to those that are publicly funded or otherwise free of charge.
90
EESC study on Recent Evolutions of the Social Economy in the European Union, 2017.
91
978-3-319-71473-8_3.pdf (springer.com)
92
This is further corroborated by figures coming from the two Member States with the highest absolute number of
associations. In France public sector grants represent 20% of non-profit sector budgets (2017) but have decreased
significantly in the last years because of an overall reduction of public spending. Other large sources are revenue
are fees and charges (42%), public sector contracts (24%) and membership fees (9%). In Germany, associations
derive their revenue primarily from membership fees (38.6%), self-generated revenue (20.1%), donations
(18.8%), and public funding (11%). Figures include UK and NO.
37%
54%
9%
Excluding direct volunteer action
Government Private fees and sales Private philantropy
172
services, membership dues and investment income) accounts for 54%. Public resources account
for 37%, and do not only cover subsidies and grants, but more importantly, public procurement
contracts in sectors such as health care or education, also to be understood as market income. The
last category is private philanthropy (9%).93
Second, another indicator to consider is the presence of associations in different sectors (in terms
of market share and employment share). Following existing literature, most common sectors are
social, health- and care services, social work, education and training, sports, arts and culture,
leisure and recreation, services to households, business and employment services.94
When looking
at the figures, this is mostly confirmed when considering traditional NACE code categorisation
(see Figure 2).95
Figure 2 below shows the sectors with most labour expenditure for the third sector in the EU with
a clear dominance for social, health and care services, education and training and arts,
entertainment, and recreation.96
Box 1 zooms into certain sectors where associations are known to
perform a considerable share of market activities.
Figure 2: Non-Profit Sector workforce paid, by field of expenditure, various years.97
93
These figures encompass foundations and associations and keeping in mind that 86.8% of NPOs are associations,
it is very plausible that in reality market-related revenue and public contracts occupy a larger share for
associations, since the 9% private philanthropy relates primarily to foundations.
94
IA study.
95
See annex 4 and 13 for a breakdown per Member State as well as overview of sectoral activities of associations
following the International Classification of Non-Profit Organizations:
https://unstats.un.org/unsd/classifications/Family/Detail/2008
96
European Parliamentary Research Service: A statute for European cross-border associations and non-profit
organisations European added value assessment. Figures for third sector (as already assessed, association are a
dominant group in the third sector. Consequently, this graph gives a good estimation for the reality of
associations in sectors with biggest labour intensity.
97
The Size and Composition of the European Third Sector | SpringerLink
173
A comparison across Member States appears to be difficult. Due to differences in reporting, it is
not easily possible to compare data by sector across countries. Already the different sectors
specified suggest that individual Member States interpret and define the scope of relevant sectors
differently. In addition, there might be further differences in the interpretation of the scope of the
same sector across countries. This appears to be particularly relevant for the social domain. While
for some countries (e.g. Czechia and Denmark) all social services appear to be captured by ‘health
and social services’, the statistics for Germany seem to be more granular.98
Another approach for
clustering the activities for NPOs reported by Member States is to use the International
Classification of Non-Profit Organizations (see table 2).
Table 1: Activities of NPOs by sector, using the NACE classification
Country
M and P –
Research and
education
Q – Human
health and social
work activities
J and R – Information,
communication and arts,
entertainment and recreation
S – Other
services
activities
Other/
unclear
BE 23% 16% 61%
BG 34% 45% 21%
CZ 29% 23% 33% 16%
DK 11% 40% 3% 47%
DE 21% 11% 47% 18% 4%
IE 33% 8% 7% 54%
EL 30% 37% 12% 21%
ES 33% 10% 18% 40%
98
IA study. Activities have been allocated by NACE code. Due to differences in the level of aggregation of the reported
data, shares can only be reported at the highest NACE code level. The table suggests that generally, most NPOs
(and thus most likely associations) are active in the social and health related, as well as the cultural, recreational
and communication sectors. Across countries and average of about a fourth of all entities are active in the social
and human health realm, while close to 40% are active in communication, information, arts, entertainment, and
recreation.
0,80%
0,80%
1,10%
0,70%
1,90%
6,50%
5,80%
19,60%
14,40%
30,20%
18,30%
0,00% 5,00% 10,00% 15,00% 20,00% 25,00% 30,00% 35,00%
International
Phil.Intermediaries
Environment
Other
Advocacy
Professsional
Development
Health
Culture
Education
Social Services
Paid Employment
174
FR 7% 11% 63% 15% 4%
HR 9% 13% 45% 27% 7%
IT 4% 10% 70% 11% 6%
LT 56%
LU 80% 20%
HU 61% 39%
AT 21% 27% 15% 38%
PL 11% 24% 39% 27%
PT 4% 16% 47% 27% 7%
SI 9% 19% 52% 11% 9%
FI 6% 35% 16% 43%
SE 16% 20% 27% 19% 18%
Table 2: Activities of NPOs by sector, using the International Classification of Non-Profit
Organisations99
99
Comparative legal analysis of associations laws and regimes in the EU - Publications Office of the EU (europa.eu)
175
A = Culture, communication, and recreation activities,
B and K = Education services and Professional, scientific, and administrative services,
C and D = Human health services and Social services,
E = Environmental protection and animal welfare activities
Box 2: Sectors with strong presence of associations and NPOs in the EU
Social services sector: long term elderly care
As a benchmark for the economic size of social service providers100
, Social Services Europe represents over
200 000 primarily not-for-profit organisations employing 10 million employees in 2018. The mix of public, for
profit and non-profit entities in this sector is very different across Member States.
Zooming into the market share of the long-term elderly care sector, many Member States have non-profit social
service providers dominating the market vis-à-vis the for-profit actors: The Netherlands (100% of the market),
Germany (59%), Italy (49%), Belgium/Flanders (49%) and Austria (29%). In a few Member States, the public
sector represents the majority (FI, LT, SK).101
In Ireland (65%) and Estonia (80%) the market is dominated by for
100
Roughly speaking the social services sectors covers fully NACE 88 ad 89.
101
https://socialemployers.eu/en/news/new-report-on-the-social-services-workforce-in-europe-current-state-of-play-
and-challenges/ The size in terms of employment goes beyond the figures earlier captured in this Annex. There
Category A B and K C and D E F G H I J L
BE 16% 23% 12%
BG 34% 45% 24%
CZ 33% 29% 23%
DK 3% 11% 40% 5%
DE 47% 21% 11% 3% 9% 1% 4% 2% 4%
IE 15% 7% 23% 6% 27% 7% 3% 5% 7%
EL 37% 30% 12%
ES
FR 63% 7% 11% 3% 15%
HR 44% 9% 13% 5% 10% 17% 2%
IT 70% 4% 10% 2% 8% 6%
LT 58%
LU 80% less than 5%
HU 61%
MT
AT 27% 12% 18% 8% 1% 7% 28%
PL 39% 11% 24%
PT 47% 7% 13% 1% 3% 8% 0% 12% 5% 3%
SI 52% 9% 13% 7% 12% 1% 3% 2%
FI 41% 6% 4% 1% 10% 37%
SE 25% 2% 3% 1% 30% 9% 2% 3% 3% 21%
176
profit providers.102
Given the aging demographics in the EU, the market value of this sector is expected to grow
exponentially. Since the 1990s, several Member States opened the elderly care market to for-profit providers with
the aim to lower the price and increase the quality (mixed success).
Research & Technology Organisations (RTOs)
RTOs are mainly non-profit organisations whose core mission is to produce, combine and bridge various types of
knowledge, skills, and infrastructures to deliver a range of research and development activities such as
technological and social innovations. RTOs have a very distinct funding model that neither has the substantial
basic funding of universities nor an assured market income, while they still pursue their mission to support
enterprises to fund their R&D investment.103
The network organisation EARTO represents 350 RTOs – of which
80% are NPOs engaging 150.000 of highly skilled researchers and engineers managing a wide range of technology
infrastructures.
NACE code information is limited – the Work Integration sector
It is not always possible to identify the real economic activity based on the NACE code categorization of the
company. For example, Work Integration Social Enterprises (WISE) are companies, often registered under an
association legal form with the aim to employ persons with a distance to the labour market (e.g. persons with
disabilities). As a consequence, those are mainly registered under NACE code social work activities (NACE 88) or
others. However, a recent study shows that such WISEs in reality are mainly present in production sectors such as
manufacturing, packaging, assembly, recycling, repair, as well as service provision sectors. Consequently, the
actual economic activity and value is not well represented in official business statistics.104
Third, another indicator relates to the tax regime (e.g. tax benefits) of associations in the Member
States. According to the IA study, there are no Member States that prohibit associations from
conducting economic activities. In some Member States, associations are explicitly considered
as undertakings, that is, as entities performing economic activities (e.g. BE, NL)105
. However,
in other Member States, certain restrictions exist apart from the tax regime and, as a general rule,
in the associations’ legal framework. For example, in some Member States, the economic activity
must be linked to the statutory purpose (e.g. RO and LT). Others require to identify the economic
activities that they wish to carry out in their founding documents (SI). Others state that the
economic activity should not be the primary purpose or main activity but only incidental/ auxiliary
(HU, LV, CZ). Some Member States allow to perform economic activities if they register for these
activities as a for-profit legal entity (PL, CZ, SK). Some Member States restrict the use of the
profit solely for the achievement of the statutory goals and performing the primary activities of the
organization (CZ and SI).
are two reasons: 1) the big share of public social service providers and 2) the figures for social services are more
recent (5-year gap).
102
Care homes for older Europeans: Public, for-profit and non-profit providers (europa.eu)
103
https://www.earto.eu/about-rtos/
104
https://www.bwiseproject.eu/en/results
105
Subject to applicable exception, based on case
177
2. Sectors of activities of cross-border associations
Where certain datasets are helpful to demonstrate the economic activity of associations in general,
this is barely the case for specific cross-border activities of associations. Following the literature
at hand, associations perform cross-border activities when they provide goods and services beyond
their Member State of establishment, when their members come from different Member States, as
well as when they collect assets, notably in the form of donations. Associations are also specifically
organised at the EU or global level when it comes to facilitation of cooperation in certain sectors
(e.g. health, care and social services), policy areas (e.g. social inclusion, sports policy), as well as
to develop cross-border innovation and research projects (e.g. RTO’s and social innovation
projects) and perform general activities (regional, civil society, sectoral, business). Many of those
activities can greatly overlap.
Two specific types of activities can be highlighted as particularly relevant in this context, which
are expected to benefit from this initiative: first, associations that are particularly active across
borders in neighbouring regions, for example in service sectors such as health-, care- and social
services. However no exact data is at hand to estimate such activities. Alternative manners to
estimate the relevance are for example to look at research done by of the European Association for
Border Regions106
and the thematic priorities of Interreg Europe program with over 60 cross-
border programmes (to be understood here in the context of neighbouring regions) singling out
‘association’ as a specific beneficiary of support, engaged in 15% of all projects during the
program period 2013-2013.107
A second group are the so called “International NPOs” (INPOs),
defined as NPOs that are set up in more than one Member State with objectives and activities
framed in a European or wider context. In total, there were an estimated 5000 INPOs established
across the EU countries in 2020 (UIA, 2021), which is however a firm underestimation.108
Germany (8%) and Austria (8,5%) are amongst the few Member States with reliable data picturing
associations operating cross border.109
Combining these figures with secondary sources offers a
106
Association of European Border Regions | AEBR | AGEG | ARFE
107
Cross-border Archives • Interreg.eu and the Keep.eu database contains data for 9 079 Interreg projects (out of the
9 485 or 96%). It serves all professional audiences in need of aggregated data regarding projects and beneficiaries of
European Union cross-border, transnational and interregional cooperation programmes among the member States, and
between member States and neighbouring or pre-accession countries.
108
The number of INPOs has increased about 30 % since 2010, with an increase by about 100 each year. According
to the European System of National Accounts, operations of NPOs in another Member State are counted as
'domestic' actors if they have an ongoing and formally registered presence there. For example, the various Caritas
operations across Europe would not be part of Caritas Germany or Caritas International but would be included in
the domestic non-profit sector in the respective Member States where they are present. Many NPOs have de facto
become major European actors but are not recorded as such officially (European Parliament, 2022).
109
Stemming from representative surveys among associations in the respective countries, leading towards an 8%
estimate. Given their historically strong third sectors and vibrant, organised civil societies, as well as their level of
economic prosperity, the share of associations active across the EU might be overall smaller than the shares reported
for Germany and Austria.
178
best estimate figure of 8 % of all associations in the EU, which is about 310 000 associations
operating cross-border (see annex 4 for detailed calculations). The sets of figures presented in this
section give the measure of the socio-economic value of associations in the EU but also an
indication of their untapped potential and scale of missed opportunities for the single market, more
precisely in terms of goods and services provided.110
110
More detail, see Annex 4, Section 2.1 and Section 3.2
179
ANNEX 7
SME TEST
1. Step 1/4: Identification of affected businesses
According to the revised user guide to the SME definition (2020)111
and Title I of the annex to
Recommendation 2003/361/EC1
, SMEs are defined on the basis of two parameters:
i) Number of employees and turnover
ii) Performing of an economic activity, irrespective of its legal form, without any
reference to whether or not the undertaking has the purpose of making a profit.
The comparative legal analysis conducted in this Impact Assessment (IA) shows that in all
Member States associations are characterized by a non-profit purpose, which is mostly interpreted
as a purpose other than profit-sharing and implies the profit non-distribution constraint. It is by
now generally recognized that the non-profit purpose of associations does not prevent an
association from conducting economic activities and even from making profits from them, as the
non-profit purpose only implies the prohibition on the distribution of profits.
Therefore, associations engaged in economic activities may fall within the formal definition of
micro, small and medium-sized enterprises adopted by the European Commission and should then
be regarded as enterprises.
Typically, associations have a small number of staff and low budget available. For example, in
Italy, 91% of all associations do not have any employees, but only rely on volunteers. In contrast,
the share of associations that employ more 10 people or more is at just 1%112
. Similarly, in France
96% of the associations do not have any employees,113
while this share is lower in Germany, where
about one in four associations employs one person, and 7% of the associations employ at least 50
people.114
In Lithuania, 96% of all associations have fewer than 5 employees, and for Malta, a
study suggests that 95% of all associations qualify as micro or small enterprises. In terms of
resources available, in Germany 51% of the associations operate with less than EUR 10 000 per
year, while only 3.8% of the associations have an annual income exceeding EUR 1 000 000.115
In
111
DocsRoom - European Commission (europa.eu)
112
EUR-Lex - 32003H0361 - EN - EUR-Lex (europa.eu)
113
https://www.associations.gouv.fr/l-association-employeur-de-salaries.html
114
https://www.ziviz.de/download/file/fid/529
115
Ibid.
180
France, the share of associations operating with less than EUR 10 000 is higher (74.6%), and only
1.3% of the associations have an annual budget exceeding EUR 500 000.116
Therefore, the large
majority of associations can qualify as micro-enterprises.
In light of this, while the initiative does not specifically target SMEs or impose new administrative
obligations on SMEs, its objectives directly affect associations that qualify as such. Notably, the
initiative focuses on associations and aims to tackle barriers to associations’ activities across
borders in the single market. Given that small associations have typically fewer resources and
capabilities at hand to overcome existing barriers, adjustments of the barriers to entry and operate
are expected to have a particularly positive impact on the competitive position of small
associations. Still, evidence from the Impact Assessment Study (“IA study” thereafter) shows that
also SME size associations have clear drivers and interest to develop cross border activities. Data
collected through the IA study suggests that there are around 3.87 million associations in the EU,
with a part of them qualifying as micro-organisations, as mentioned above. Among existing
associations, it is estimated in the IA study that around 8% (~ 310 000) are already active cross-
border and some 350 000 are estimated as theoretical maximum potential number to expanding
their operations cross border. It must be noted however, that not all barriers can be addressed by
this initiative, and it is thus not realistic to expect all unused potential to be unlocked by this
initiative. A comparative analysis with reduction of barriers for companies in the last 15 years
indicates that the short to medium term maximum potential of this initiative is to mobilise a total
of 185 000 additional associations (5% of the estimated total number of associations interested in
going cross-border) that could go cross-border in the event of sufficient policy intervention at EU
level generating ~75 000 new jobs (i.e. additional FTEs working cross-border).
Given that the assessment suggests the preferred option to be PO3, meaning creation of an
additional legal form of association at national level recognised in all Member States through
mutual recognition, only associations that take up the additional legal form are expected to be
affected.
Key question: To what extent is the initiative relevant for SMEs?
The preferred policy option does not per se distinguish between size classes. The impacts of the
preferred option (PO3) may however have distributional effects given that the identified barriers
to operate cross border are particularly difficult to overcome for micro associations. In many cases
barriers for cross border operations translate into costs of information gathering and provision,
which tend to be disproportionately higher for smaller organisations.
As analysed in the IA , the preferred policy option will only affect associations that want to take
up the new legal form, meaning there is no imposed obligation to convert to the new legal form in
order to conduct cross-border activities. Notably, the preferred policy option is expected to
improve their situation in terms of reduced costs and administrative burden to set up and conduct
activities cross-border. The extent of the impact and distributional effects depend largely on the
uptake of such a new legal form. (See step 3).
116
https://www.associations.gouv.fr/IMG/pdf/tchernonog_associations_fcc_2018.pdf.
181
The preferred option (PO3) can be seen as a mixed form of PO1 and PO2 packaged in one: it
provides advantages for everyone as it does not force harmonisation but allows for lowered entry
barriers also for small associations. Consequently, PO3 is expected to be more inclusive in that
also smaller associations are more likely to benefit.
2. Step 2/4: Consultation of SME Stakeholders
The consultation activities captured SMEs and representative associations representing SMEs. In
addition to the public consultation, the targeted survey ensured a solid sample of stakeholders, by
reflecting associations’ typical structure. 88 associations responded to the survey, whereas 45 of
them were active in only one Member State and 43 active cross border. At least 77 (over 90%) of
the associations responding to the survey can be classified as SMEs, whereas at least 60 are micro-
organisations with less than 10 employees. Small organisations were also the primary target of
subsequent in-depth interviews, where 33 (60%) of the 64 in-depth interviews were conducted
with associations. Inputs were analysed and integrated into the analysis.
The majority of the associations that took part in the in-depth interviews indicated they face
restrictions when operating in other Members States. The most significant Single Market barriers
include the following: administrative formalities to implement actions in another Member State
without prior registration, registration in another Member State (cost, case handling time,
uncertainty about constitutive requirements etc.), and differences between Member States in
reporting obligations.
Other relevant barriers indicated include: access to funding in another Member State, difficulty in
obtaining recognition of tax benefits by competent authorities of another Member State,
uncertainty of the types of economic activities permitted, differences between Member States of
liability, liquidation and dissolution regimes, differences in regulations related to hiring employees
and differences in membership requirements.
All these barriers are considered powerful enough to dissuade associations from extending their
operations and carrying out their activities across Member States. This is also confirmed by
respondents to the targeted survey (mainly micro/small associations).
3. Step 3/4: Assessment of the impact on SMEs
During this Impact Assessment, data collection tools were designed to gather information on costs
of (cross border) operation and establishment and the opportunity cost of unused potential of cross
border activities of associations. Since SMEs were a part of the stakeholder group for the
stakeholder targeted survey, their inputs were used as evidence to assess the impacts of the
different policy options and are reflected in the main findings.
The preferred policy option (PO3) is expected to generate costs savings and lead to simplified
engagement across borders (as outlined in the IA , Section 7). Notably, under this policy option
the direct economic costs of cross-border operations are expected to be significantly reduced
compared to the baseline for associations (e.g. compliance and administrative cost of launching
182
cross-border operation) and, consequently, the compliance and administrative burden will
decrease. Furthermore, the preferred option has the potential to reduce costs of establishment,
notably the information costs relating to cross-border and the need to understand the new legal
form. An association wanting to establish in another Member State is expected to save costs, as
the legal form in the host country will benefit of mutual recognition. As a potential cost savings
for operating cross-border (recurring costs), it is estimated an order of magnitude leading to up to
EUR 770 million in comparison to the baseline (maximum possible excess cost reductions per
year, see annex 4 for calculations).
SME companies offering services or goods in situations and in sectors where associations are
strongly presented, may increase competition with associations qualified as SMEs. The increasing
competition will depend on the sector and the uptake of the legal form of the PO3.
4. Step 4/4: Minimising negative impacts on SMEs
As noted above, despite targeting associations in general, the initiative is relevant for small
organisations, which represent the vast majority of associations. Therefore, SMEs can be regarded
as the main beneficiaries of potential costs reduction and lifting of barriers by the preferred policy
option, also in light of the fact that compliance costs and administrative burden tend to be
disproportionally higher for small organisations. For the specific design of concrete new
requirements, it will be crucial that the mutual recognition across Member States is granted.
Moreover, it will be important to avoid introducing new obstacles in form of additional
requirements being added at national level.
183
ANNEX 8
ASSOCIATIONS OPERATING OR WISHING TO OPERATE CROSS
BORDER IN THE SINGLE MARKET – TERRITORIAL DIMENSION
1. Introduction
This Annex is about the activities of associations operating in border regions under the assumption
that associations in and near border regions have a practical need to operate and cooperate across
borders (simply due to the fact that the usual area of their operations/catchment area falls on foreign
territories), and they are consequently directly affected by the problems identified in the Impact
Assessment.
The territorial aspect has been, therefore, considered in the context of this Impact Assessment but
no specific findings have been gathered and thereby the preferred policy option has the potential
to benefit associations in cross border regions as well as the associations operating cross-
border in the single market.
The current Annex first examines the evidence provided by the Impact Assessment Study
underpinning the initiative on cross-border activities of associations in the single market
(hereinafter the “IA study”) and by the Public Consultation launched in July 2022, then provides
a case study extracted from recent literature, and finally touches upon the European Grouping of
Territorial Cooperation (EGTC) legal form (more details below and in Annex 9).
2. Gathering evidence
The Impact Assessment (IA) study as well as the Public Consultation do not provide specific
findings on problems encountered by associations operating in border regions due to the general
lack of information found (see below).
In particular, the IA study does not provide evidence related to the specific number of associations
in border regions currently operating or wishing to operate across national borders – the latter are
captured under the overall estimated number of associations with cross-border activities in one or
more Members State (i.e. 310 000) or with potential cross-border activities (i.e., a theoretical
maximum potential of 350 000). The IA study only mentions that “associations encounter
difficulties in employing people living only a few kilometres on the other side of the borders due
to taxes, residency rights, and social security”,117
which issue is anyway presumably expected to
be faced not just by associations but also by other legal forms in border regions.
The public consultation also delivered few results. Among the collected data, it can be noted that
58% out of 64 respondents agree on the statement that “an association registered in an EU Member
State currently faces restrictions when seeking to operate in another EU Member State”. Moreover, 25
117
IA study. Insights from interview with the Association of European Border Regions (AEBR)
184
respondents out of 64 explained that associations are affected by challenges specific to border
regions. Most respondents did not provide further details on the nature of those specificities and
principally assumed that cross-border collaborations could be higher in border regions, despite
they did not provide further evidence and neither statistical data can confirm this. The IA study
survey showed that 70% (30 out of 43 replies) of the associations acting cross-border had cross-
border activities in at least one border region.
In addition, qualitative and quantitative information regarding “Interreg programmes promoting
cooperation across borders (2021-2027)” can support that civil society organisations, including
associations, active in border regions are (or desire) undertaking cross-border activities in
neighbouring Member (see IA, Section 2 for more details).
When it comes to the existing literature, one case study was identified in the Compendium 2020-
2021 document titled “B-solutions: solving Borders and Obstacles”, which shows the specific
difficulties encountered in border regions118
. The case study concerns the establishment of a single
cross-border entrance for the European Archaeological Park at Bliesbruck-Reinheim. The Park is
situated on the territories of the Saarpfalz-Kreis and the Département de la Moselle border regions,
creating many problems for the French and German local authorities due to different applicable
legal frameworks. For instance, the establishment of a joint entrance involves various legal matters
that must be addressed, specifically in the fields of finance law, tax law, customs law, public
procurement law, budget law, domiciliary right and security. Hence, the authorities decided that
the best option was to create a common legal form for the Archaeological Park. In the short-term,
they decided to create an association on a partnership basis under French local law, which however
could serve only as temporary solution, since an association for this purpose is somewhat limited
in its scope and capacity. In the long term, they decided to make it evolve to a more suitable legal
form, such as a EGTC119
, which has the benefit of being a binding structure of cross-border
cooperation. This said, the definitive form must be suitable first and foremost to the tasks of the
park. Moreover, the problems the park encountered do not seem to be all within the scope of the
initiative on cross-border activities of associations. More generally, the EGTC offers three
advantages by being a statute provided at European level:
1. It gives better visibility to the structure at a European level;
2. It allows exchanges of good practices with other EGTCs;
3. And it binds structures of cross-border cooperation.120
The Compendium document also highlights the important use of the EGTC legal form to address
specific needs at border regions level.
118 Doc B-solutions: solving border obstacles – a compendium 2020-2021: Case study: Establishment of a single
cross-border entrance for the European Archaeological Park at Bliesbruck-Reinheim, p. 59, available at
8f68c1_d4b7ca6eb8c4448598e62e0b66f8c08e.pdf (b-solutionsproject.com) - from DG REGIO
119
European Grouping of Territorial Cooperation (europa.eu)
120 Doc B-Solutions Annex I.a. Final report by the expert, 2021, p.5. *Report_17.pdf (aebr.eu)
185
3. Linking with the European Grouping of Territorial Cooperation
As also explained in Annex 9, the EGTC is a legal form intended to facilitate and promote cross-
border, transnational and/or interregional cooperation between its members. In principle, this form
can be used by associations willing to cooperate across borders, but there is a clear limitation in
scope due to the fact that interested associations must consist of either public bodies or bodies
governed by public law or, ultimately, they must correspond to undertakings entrusted with
operations of services of general economic interest.
In practice, when it comes to national rules implementing the EGTC Regulation121
, it has to be
considered that in some cases the EGTC form is assimilated to non-profit or public benefit
organizations. For instance, in Bulgaria, “the [EGTC] with registered office in the territory […]
shall be registered as non-profit legal entities”. Similarly, an EGTC that “has its registered office
located in Greece shall take the form of a civil non-profit company (in accordance with article 741
of the Civil Code)”. Romania and Hungary also follow the same legal approach to EGTCs.
Finally, the Commission proposal of 2018 for a Regulation “on a mechanism to resolve legal and
administrative obstacles in a cross-border context (ECBM)”122
is also intended to support, among
others, the EGTC and could be reasonably expected to further enhance the usability of this legal
form for cooperation purposes, especially in the case of border regions. In this respect, the proposal
for a Regulation sets up a voluntary mechanism to overcome legal obstacles (i.e. legal provisions
that obstruct the planning, development, staffing, financing or functioning of a joint project) in
border regions, by derogating to the “normally” applicable rules. This proposal, once adopted by
the co-legislator, would help address specific needs and obstacles at border regions level. Although
supported by the European Parliament, the competent Council’s working party has stopped its
works on the proposal.
A recent initiative of the European Parliament aims to facilitate to overcome the impasse on the
ECBM by issuing a legislative own-initiative report (‘INL’) revising the ECBM proposal of
2018123
, the Parliament will make use of its indirect legislative initiative powers (Article 225
TFEU) inviting the Commission to present a new legislative proposal building on the EP initiative.
The European Parliament vote is scheduled for September 2023.
121
Regulation (EC) No 1082/2006 of 5 July 2006 on a European grouping of territorial cooperation (EGTC)
122
Proposal for a Regulation of the European Parliament and of the Council on a mechanism to resolve legal and
administrative obstacles in a cross-border context, COM(2018)373final of 29.5.2018.
123
Draft report with recommendations to the Commission on amending the proposed mechanism to resolve legal and
administrative obstacles in a cross-border context (2022/2194 INL) of 27.04.2023.
186
ANNEX 9
RELATIONSHIPS OF THE INITIATIVE ON CROSS-BORDER
ACTIVITIES OF ASSOCIATIONS WITH
1) LEGAL FORMS IN SOCIAL ECONOMY
2) RELATED INITIATIVES ON SOCIAL ECONOMY AND
DEMOCRACY
3) COMMISSION PROPOSALS SETTING A EUROPEAN
ASSOCIATION
Table of content
1. RELATIONSHIP WITH LEGAL FORMS IN THE SOCIAL ECONOMY AND OTHERS
1.1. Other Social economy legal forms
1.1.1. European Cooperative Society
1.1.2. Foundations
1.1.3. Mutuals
1.2. Other types of legal forms
1.2.1. Private and public limited liability companies
1.2.2. European Economic Interest Grouping (EEIG)
1.2.3. European Grouping of Territorial Cooperation (EGTC)
1.2.4. European Research Infrastructure Consortium (ERIC)
1.2.5 European Digital Infrastructure Consortia (EDIC)
2. RELATIONSHIP WITH FORTHCOMING RELATED INITIATIVES
2.1. Social economy framework
2.1.1. Council Recommendation on framework conditions for social economy
2.1.2. Commission Staff Working Document on relevant taxation frameworks for social
economy entities
2.1.3. Commission Staff Working Document on non-discriminatory taxation of charitable
organisations and their donors
2.2. Defence of Democracy Package
3. COMMISSION PROPOSAL OF 1992 SETTING A EUROPEAN ASSOCIATION
1. Relationship with legal forms in the social economy and others
The aim of this annex (point 1) is to provide an overview of the existing types of legal forms at
national and/or EU level and their relevance to the initiative on cross border activities of
associations in the single market.
Association is a legal type of entity (or a legal form of organisation) among others operating in the
Social Economy (i.e., foundations, cooperatives and mutual societies)124
.
124
Action Plan for the Social Economy (COM/2021/778 final) of 9.12.2021: “Traditionally, the term social economy
refers to four main types of entities providing goods and services to their members or society at large:
187
These legal forms, with adaptations to national specificities, are present in all Member States
jurisdictions or in most of them. In addition, there exist specific EU legal forms provided by EU
Regulations, e.g. for a European Economic Interest Grouping (‘EEIG’) or for a European
Cooperative Society (‘SCE’), for the European Grouping of Territorial Cooperation, for the
European Research Infrastructure Consortium (ERIC).
1.1. Other Social economy legal forms
1.1.1.European Cooperative Society
The European statute concerning cooperatives, i.e. the “European Cooperative Society” (ECS),
was created through Regulation EC N° 1435/2003 which aims to help cooperatives who have
activities in more than one EU country. Although a limited number of European cooperatives
societies have been set up since the entry into force of the above-mentioned Regulation125
, the
statute has had numerous positive effects, including amelioration and indirect approximation of
national cooperative laws, an increase on the visibility of cooperatives.126
For instance, the existing
EU legal form takes into account the cross-border aspects relevant to European Cooperatives, by
laying down specific provisions on transnational membership, transfer of the registered office,
principle of non-discrimination, procedure governing mergers and so on.
Furthermore, having regard to the principal object of this legal form – which is the satisfaction of
its members’ needs and/or the development of their economic and social activities - and given that
it normally allows for a limited distribution of profits to its members, the European Cooperative
Society is not suitable to serve the purpose of the current initiative, which instead concerns
associations with a wide variety of purposes and, primarily, with a non-profit aim.
In light of this, the European Cooperative Society addresses potential cross-border barriers
encountered by cooperatives, which are, therefore, excluded from the scope of the initiative on
cross border activities of associations.
1.1.2. Foundations
Foundations are, along with associations, one of the often used social economy legal forms.
However, associations’ role and activities are far more numerous than foundations (see chapter 1
under the market context). For instance, according to the 2021 EP study127
, there were
approximately 2 million registered associations in the face of around 5 000 foundations in France,
whereas in Germany there were almost 600 000 associations in the face of 25 000 independent
foundations. Along this same line, in 2018 in Italy associations accounted for 85% of NPOs
cooperatives, mutual benefit societies, associations (including charities), and foundations. They are private
entities, independent of public authorities and with specific legal forms”.
125
COM (2012) 072 final. The Commission's report on the implementation of the ECS regulation acknowledges the
creation of 24 European cooperatives which is the latest existing data on the matter.
126
Study of 2010 on the implementation of the European Cooperative Regulation.
127
A statute for European cross-border associations and non-profit organizations Potential benefits in the current
situation | Think Tank | European Parliament (europa.eu)
188
whereas foundations represented the 2.2% of the total share. Foundations are regulated under the
national legislation.
Associations and foundations both act for a non-profit purpose, can cooperate together in their
social economy work128
, and in some Member States are regulated in the same legislative act.129
At the same time, there are important differences between foundations and associations, as
indicated in the table below:
Table 1: Main differences between foundations and associations
Foundations Associations
Foundations are “about money” – they are set up by
one or more natural and/or legal persons (founders) to
allocate assets for a determined purpose. They often
have a patrimony/endowment, which is linked to
achieving a specific purpose. They do not have
members.
Associations are “about people” – established to pursue
a common goal. They are set up by two or more natural
and/or legal persons who qualify as members (member-
based model of organization). Associations do not have
share capital and their governance is not focused on the
administration of the assets but on co-decisions of the
members as to how to fulfil the association’s purpose.
Foundations are required to register in most Member
States and State approval is needed in the majority of
Member States. They have legal personality.
Associations are required to register in most Member
States and, only in few cases, a recognition by a public
authority is the prerequisite to acquire legal personality.
Majority of foundations are public benefit purpose
foundations and these are recognised in all Member
States (10 MS recognise only public benefit purpose
foundations). Some countries also recognise private
benefit purpose foundations (that mainly focus on
members of a family or on a closed circle of
beneficiaries).
Associations can acquire a public benefit status in all
Member States. This status, regardless of its exact
denomination, grants a promotional status which entails
a number of benefits (including of fiscal nature).
Foundations are governed by a special body composed
by the founder (governing board and in some Member
States, foundations also have supervisory boards).
They do not have an assembly of members, because
they do not have members.
Associations have a corporate structure that comprises
at least, a decision-making body and an executive body.
Additionally, it could be also provided a body of
financial control.
Foundations are often owners of or control groups of
companies. They can also generate funds through
asset management (in some countries it is limited to
less risky investments).
Associations’ resources mainly derive from non-profit
activities, donations, membership fees, payment for
products services provided, as well as from public
funding and subsidies.
128
E.g. the Friedrich Ebert Foundation or the Konrad Adenauer Foundation are registered associations and operate in
several MS; Caritas Germany is an umbrella organisation of 25 000 entities registered as an association that sub-
includes foundations and associations.
129
As an example, in 5 EU national jurisdictions (i.e. Bulgaria, Cyprus, Latvia, Luxembourg and Romania),
associations are regulated together with foundations in a separate act on non-profit entities or on associations and
foundations.
189
Foundations are normally subject to strict formation,
governance and supervision rules (e.g. all Member
States require them to report on their finances on at
least an annual basis and majority MS require an
annual report on activities; most Member States
mandate public supervision by an authority or court)
to prevent abuse of the founding patrimony or assets.
Associations are subject to State supervision both
during the registration phase (where a first legality
control is made) and during their operation (due to the
annual financial reporting obligations provided for in
all Member States).
One of the major problem that foundations face when operating cross-border is taxation-
related130
(given the different national tax concessions for public benefit purpose foundations and
tax incentives for their donors), and the two Staff Working Documents issued as part of the “Social
Economy framework” will provide a clearer understanding of the rules for cross-border taxation
of non-profit organisations like foundations and associations (see point 2.1 of this Annex for more
details).
In the recent past, foundations were already subject to a Commission proposal on a European
Foundation in 2012131, which aimed to remove cross-border obstacles for public benefit purpose
foundations and their donors, and to facilitate the efficient channelling of funds for public benefit
purposes. This proposal had to be withdrawn in 2015 due to lack of agreement among Member
States. There are no indications that the situation has sufficiently changed in the meantime. Due to
substantial divergences between national foundation rules based on legal and cultural traditions,
any harmonisation of national laws would be likely to meet comparable if not higher resistance
than the Statute.
In light of the above reasons, and considering the differences with associations, foundations are
not in the scope of the current initiative.
1.1.3. Mutuals
Mutual societies (or simply mutuals) are a legal form present not in all EU Member States, while
associations are present in all Member States. Roughly 4 000 mutuals companies were present in
Europe according to a study of 2017.132
Mutual are excluded from the scope of the initiative on cross border activities of associations given
that specific needs that may have and barriers that may face should be tackled separately given
their presence in some Member States only. This is demonstrated by a former attempt aimed at
creating a European statute on mutual, made in the past, that however ended up in the withdrawal
of the initiative by the Commission, in 2006.
130
Impact assessment accompanying the document Proposal for a Council Regulation on the Statute for a European
Foundation (FE); Comparative highlights of foundation laws - The Operating Environment for Foundations in
Europe
131
COM(2012) 35 final.
132
CIRIEC 2017 – Report on ‘Recent evolutions of the social economy in the European Union.
190
Activities on the subject resumed in 2010 and two studies on mutuals were then commissioned133.
The European Parliament adopted a resolution in 2013.134
The resolution asked the Commission
to present a Statute for a European Mutual to the Council and EP, similar to the other existing
European business legal forms (e.g. the European Company and the European Cooperative
Society). The Commission also carried out a public consultation which concluded in June 2013
and indicated that a specific legal Statute, as a means to promote the activities of mutuals across
borders, is not supported by “all Governments and stakeholders”135
.
In light of the above reasons, and considering the specific barriers faced by mutuals as well as their
uneven presence across the EU and the lack of support from “Member States and stakeholders”
(as emerged following the public consultation of 2013) – mutuals are not in the scope of the current
initiative.
Table 2: Main differences between mutuals and associations
Mutuals Associations
Absence of shares: mutuals are a grouping of persons
(physical or legal), which qualify as members. Their funds
are owned and managed jointly and indivisibly. A mutual has
no external shareholders and does not seek to maximize
profits. Mutual organizations exist for the members to benefit
from the services they provide; their main resource are the
fees or premiums paid by their members/owners.
An association is a membership organization
composed of natural and/or legal person who
qualify as members. It exists for the pursuit of a
purpose other than that of profit-making.
Mutuals have free membership, i.e. free entry (and free exit)
for everyone who fulfils the conditions laid down in the by-
laws and abides by mutualism principles. Mutuals can be
“open” (to the population at large) or “closed” (i.e. reserved
to a geographical area, an industry or an occupation).
Associations have an open and variable
membership, which means that the admission of
new members does not require formalities such
as the amendment of the statute and that any
member can decide at any moment to withdraw
his/her membership.
Mutuals are based on the historical principle of solidarity
among its members. It means a joint liability, a cross
subsidization between good risks and bad risk and no
discrimination among members.
There is no equivalent principle for associations.
Democratic governance: principle “one person, one vote” in
opposition with the rule “one share, one vote” which is
symbolic of the corporate governance.
Associations are characterised by a democratic
voting system based on the “one person – one
vote” rule.
Independence: mutuals are private and independent
organizations, neither controlled by government
representatives nor funded by public subsidies.
Associations are private legal entities, but this
does not imply that public legal entities cannot
found or participate in an association.
134
cf. GRIJPSTRA D. ET AL. (2011) and PANTEIA (2012)
135
See Commission reply to the Parliamentary question - E-010487/2014 of 26.02.2015
191
Limited profit sharing: part of the profit of a mutual can be
shared among the owners/ members, usually as discounted
premiums or rebates. However, the main part of the profit is
reinvested in order to improve the services proposed to
members, to finance the development of the business or to
increase their own funds.
Associations are non-profit organizations, which
means that they are barred from distributing
profits to their shareholders.
1.2. Other types of legal forms
1.2.1. Private and public limited liability companies
Private and public limited liability companies are the main economic operators “for profit” and are
covered by the freedom of establishment of Treaty on the Functioning of the European Union
(Article 54 TFEU). They are subject to a comprehensive EU acquis harmonising different aspects,
e.g. formation, capital and disclosure requirements, and operations (domestic mergers and
divisions, cross-border conversions, mergers and divisions) as laid down in Directive (EU)
2017/1132 (Codified Company Law Directive)136
. The Court of Justice of the EU has issued
several judgments on the freedom of establishment of companies (from Daily Mail to Polbud137
).
In addition, EU law provides the statute of the European Company (‘Societas Europea’ or ‘SE’),
set in Regulation 2157/2001, which allows public limited liability companies from different
Member States to create an SE and run their business in the EU under a single European brand
name. The SE statute was supplemented by the Council Directive 2001/86/EC, which details the
rights for involvement of employees in SEs.
Due to the intrinsic differences between companies and associations, and considered the far more
harmonised legal context that companies benefit from within the EU - especially in relation to the
regulation of cross-border aspects138
- private and public limited liability companies are not
relevant for the current initiative.
1.2.2. European Economic Interest Grouping (EEIG)
Another existing legal form is represented by the European Economic Interest Grouping
(EEIG). According to Regulation 2137/85, an EEIG is a grouping composed of companies, legal
entities, or individuals from at least two different EU countries. It aims to enhance cross-border
economic activities of its members by pooling resources, activities, and skills. The main purpose
of an EEIG is to facilitate or develop the economic activities of its members – although this entity
is not meant to make profits for itself - that is why when it comes to natural persons, only those
who carry on an industrial, commercial, craft or agricultural activity or who provide professional
or other services can be its members.
136
Based on Article 50 TFEU, which is the legal basis for EU company law.
137
For “Daily mail” case see C-81/87, for “Polbud” case see C-106/16.
138
Meaning right to establishment which includes right to merge, divide convert across borders, as well as right to
provide services and receive/send capitals across different Member States.
192
Formally, in accordance with Article 4 of the Regulation, also associations can be members of an
EEIG139
. However, this provision addresses associations intending them as already established
legal entities, whereas the current initiative aims to cover, in addition to this case, that of single
individuals willing to form a new association with cross-border features.
In conclusion, due to its economic focus as well as to the described membership limitation – which
excludes natural persons not providing any economic/ professional contribution to the entity – this
legal form cannot serve the purpose of the current initiative on cross-borders associations.
1.2.3. European Grouping of Territorial Cooperation (EGTC)
Another type of organisation present in EU law is the European Grouping of Territorial
Cooperation (EGTC). According to Regulation 1082/2006, an EGTC enables public entities from
at least two Member States to team up under a new legal entity with full legal personality. The
objective of an EGTC is to facilitate and promote cross-border, transnational and/or interregional
cooperation between its members, with the exclusive aim of strengthening economic and social
cohesion. While associations can participate in it, they must consist of either public bodies or
bodies governed by public law or, ultimately, they must correspond to undertakings entrusted with
operations of services of general economic interest. Hence, this legal form excludes all the
associations falling out of this scope to benefit from an easier way to operate across borders. More
details available in Annex 8.
As for the previous legal forms, also the EGTC form is not suitable for the purposes of the current
initiative, given its limitations in terms of members allowed.
1.2.4. European Research Infrastructure Consortium (ERIC)
Introduced with the Regulation 723/2009, the European Research Infrastructure Consortium
(ERIC) is a specific legal form that facilitates the establishment and operation of Research
Infrastructures with European interest on a non-economic basis. One of the obligatory
requirements for the establishment of an EIRC is the carrying-out of European research
programmes and projects.
It clearly follows from its inherent features and objectives that this legal form is not suitable for
addressing overall obstacles encountered by associations operating cross-border activities.
1.2.5. European Digital Infrastructure Consortia (EDIC)
After adoption of Decision 2022/2481 on 14 December 2022, establishing the Digital Decade
Policy Programme 2030, the possibility to set up European digital infrastructure consortia (EDIC)
was introduced. The EDIC is an implementation mechanism meant for the deployment of multi-
country projects aimed at contributing to the achievement of the digital objectives set out in the
Decision thereof. To set up a EDIC, Member States shall submit a written application to the
Commission, upon which the latter shall adopt a formal decision - either setting up the EDIC or
rejecting the application - by means of implementing acts. Membership of an EDIC may be open
139
Along with other types of legal entities, as specified by article 4.
193
to entities other than Member States, including third countries, international organisations of
European interest, and public or private entities.
Bases on its field of application as well as on its formation procedure, this legal form is not
suitable for the purposes of the current initiative.
194
2. Relationship with forthcoming related initiatives
As foreseen in the Commission Work Programme 2023, the Social Economy framework, under
the Commission’s priority “An economy that works for people”140
, will include the legislative
initiative on cross-border activities of associations, which will be developed consistently with the
non-binding initiatives that are also part of the package – i.e. the Council Recommendation on
developing social economy framework conditions141
, the Commission Staff Working Document on
“Relevant taxation frameworks for social economy entities”142
, which is based on available
analysis and input provided by Member States’ authorities and social economy stakeholders; and
the Commission Staff Working Document on “Non-discriminatory taxation of charitable
organisations and their donors143
: principles drawn from EU case-law”, which provides a
description of this key principle as interpreted by the Court of Justice of the European Union – see
below for more details.
Furthermore, the legislative initiative on cross-border activities of associations will also indirectly
link with the Defence of Democracy initiative, under the Commission’s priority of “A new push
for European democracy”.144
2.1. Social economy framework
Other initiatives planned in the Social Economy framework are:
2.1.1. Council Recommendation on framework conditions for social economy
The Social Economy Action Plan of December 2021 announced a Council Recommendation on
developing framework conditions for social economy.
The Council recommendation will aim to advance social inclusion and access to the labour market
by supporting Member States in integrating the social economy into their socio-economic policies
and creating supportive measures and a favourable environment for the sector. Tapping the
potential of the social economy requires both adapted legal frameworks and targeted policies by
Member States. This will be achieved by drawing on research, learnings, and stakeholder feedback
to provide recommendations on how public policies and legal frameworks can be tailored to meet
the needs of social economy entities, particularly in areas where it is less developed, and how
administrative and institutional structures can be adapted to support these entities and engage with
stakeholders in the sector. These recommendations will touch upon a variety of areas of relevance
to the social economy, such as employment policy, education, skills, and training, social services,
140
The European Commission priorities for 2019-24.
141
Proposal for a Council recommendation on developing social economy framework conditions, COM(2023) 316
final of 13.06.23
142
Staff Working Document: Relevant taxation frameworks for Social Economy Entities, SWD(2023) 211 final of
13.06.23
143
Staff Working Document: Non-discriminatory taxation of charitable organisations and their donors: principles
drawn from EU case-law, SWD(2023) 212 final of 13.06.23
144
Idem
195
green transition, territorial cohesion, data and research, access to funding, access to markets, State
aid, taxation, public procurement, and social impact measurement.
While the current initiative will focus on associations that operate cross-border, the Council
Recommendation is broad in scope, aiming at addressing the various legal forms that compose the
social economy (the main ones being cooperatives, mutual benefit societies, associations, and
foundations).
It should be considered another fundamental difference when it comes to the choice of legal basis
among the two initiatives: the Council recommendation (Art. 292 TFEU) will likely be based on
article 153, point h and/or j (respectively, integration of persons excluded from the labour market
and the combating of social exclusion), and article 149 (incentive measures to encourage
cooperation between MS and support their action in the field of employment); while the initiative
on cross-border activities of associations will likely be based on Articles 114 and/or 50 TFEU.145
That being said, interlinkages exist between the two initiatives. The aim of the legislative initiative
– improving the conditions for the functioning of the single market by facilitating the activities of
associations across borders – ties in with the aim of the Council recommendation to foster social
inclusion and access to the labour market by promoting an enabling environment for the social
economy that improves regulatory and administrative conditions for social economy entities,
including associations.
The Social Economy Action Plan of December 2021 also announced the two following sets of
guidance (which together with the initiative on cross-border activities of associations will be part
of the Social Economy framework):
2.1.2. Commission Staff Working Document on relevant taxation frameworks for
social economy entities
This provides a comparative overview of the tax framework in which social economy entities
operate in each Member State. It also provides an overview of the tax framework applicable to
public benefit organisations, as many Member States consider social economy entities to be public
benefit organisations and tax them accordingly. This is complemented by country fiches for each
Member State highlighting the relevant features.
The Staff Working Document will be broader in scope than the initiative on associations, as it will
cover legal entities that fulfil the requirements for public benefit purposes of Member States (e.g.
associations and foundations) and/or which are considered as social enterprises. When it comes to
associations in particular, it can be considered that this Staff Working Document can address some
of the tax-related issues which were identified in the course of this Impact Assessment and, given
their nature, could not be tackled by the current initiative.
2.1.3. Commission Staff Working Document on non-discriminatory taxation of
charitable organisations and their donors
145
See also point 1.2 of the Staff Working Document – impact assessment report.
196
This will address the principles to be drawn from the case-law of the Court of Justice of the EU
with respect to taxation of charitable entities and their donors. In this respect the following cases
are relevant: Stauffer (C-386/0414), Persche (C-318/07), Missionswerk (Case C-25/10),
Commission v Austria (C-10/10), Commission v France (C-485/14) and Commission v Greece (C-
98/16).
This Staff Working Document builds on the fact that Member States enjoy broad discretion in
designing their tax systems. Thus, it is for each Member State to determine whether it will provide
for tax incentives for charitable entities and charitable giving and, if so, what kind of general
interests it wishes to promote by such tax incentives. However, once a Member State decides to
provide for a beneficial tax treatment for a charitable entity and for charitable giving, it must
provide for non-discriminatory tax treatment of comparable foreign entities and donations and
bequests made to such entities, as required under the fundamental freedoms of the TFEU.
While the case-law of the Court of Justice of the EU deals with charitable organisations and
donations/bequest to such organisations, it applies, by analogy, also to other legal forms, including
associations and foundations, when a comparable domestic association enjoys a beneficial tax
treatment. When it comes to associations in particular, it can be then considered this Staff Working
Document can address some of the tax-related issues which were identified in the course of this
Impact Assessment and, given their nature, could not be tackled by the current initiative.
2.2. Defence of Democracy Package
Following the Commission President Von Der Leyen announcement in September 2022, a future
initiative on “Defence of Democracy Package” was included in the Commission Work
Programme 2023 under the Commission priority “A new push for European democracy”.
3. Commission proposal of 1992 setting a European Association
The Commission adopted a proposal for a Council Regulation on the Statute for a European
Association on 6 March 1992,146
prescribing rules of the formation, registration, constitution,
functioning, accounting, financing, dissolution, liquidation and insolvency of the association.
The proposal was amended in July 1993. In this amended proposal,147
the Commission changed
some fundamental provisions in comparison to the previous proposal. For example, Article 2 on
the legal personality was amended to give rise to the creation of rights instead of an entitlement to
perform certain activities. The number of natural persons that could form an association was
diminished from 21 to 7 and the obligation to involve at least two EU nationalities was discarded
in favour of the obligation to involve two different EU residencies in the pool of natural persons
creating the association (Article 3(1)). As regards financing, Article 41 was extended to allow the
European Association to benefit from all forms of financing under the most favourable conditions
146
Proposal for a Council Regulation (EEC) on the Statute for a European association, COM (91)273
147
Amended proposal for a Council Regulation (EEC) on the statute for a European association, COM (93)252
197
applying to associations in the State in which, not only the European Association had its registered
office, but also in which it was established.
Despite these substantial modifications which were intended to improve the text and facilitate the
discussions at the Council some Member States, (e.g. Germany, Denmark and UK known to be
the most critical to the proposal148
) continued to oppose the Commission’s proposal to create a
European Association Statute,149
on grounds of subsidiarity and unsuitability of the legal basis
compared to the scope and purposes of the proposal150
and they, further, argued that the proposal
did not meet any proven need, its provisions did not embody the diversity of their own national
legislation and it laid excessive administrative burden on associations. The European Parliament
was supportive and continued to ask for progress on the proposal until 2005 when it was eventually
withdrawn.151
It is worth noting how the EU socio-political and legal context has evolved since the 1990s in
different ways relevant to the current initiative, e.g. recognising a growing role for non-profit
sector entities (where associations are the predominant legal form) to face societal challenges.
Indeed, two waves of EU enlargement have changed the scale, profile and aspiration of the civil
society.152
Moreover, in recent years, the nature and the scale of successive crisis (COVID-19
pandemic, Russian war in Ukraine, climate change, digital divide, migration, aging demographics,
disinformation) require mobilisation of all actors, and particularly the civil society. At the same
time, while EU Member States have adapted or introduced laws regulating domestic associations,
little has been done at national level to enable associations’ cross-border activities and mobility
(e.g. three Member States153
enacted explicit measures on cross-border conversions of associations
in another Member State and four Member States154
on cross-border mergers). resulting in
148
European Associations: The Political Debate and Basic Legal Questions, By Tim Wöffen, October 2018. As an
example, the German government criticised that the draft did not distinguish between non-economic and
economic
Associations; while, in general, the proposal was also criticized for placing too much administrative burden on
associations.
(149
) Proposal for a Council Regulation on the Statute for an European Association (91/273). To note that the past
proposal was exhaustive, regulating in detail the formation, organisation and operation modalities of the European
association.
(150
) The proposal was based on what is now Art. 114 TFEU, which was criticised by some Member States as being
incorrect and the equivalent of Art. 352 TFEU should have been used.
151
For further details on the history of this file, see e.g. Tim Wöffen (2018), ‘European Associations: The Political
Debate and Basic Legal Questions’.
(152
) Overall, the number of associations appears to have increased over time. Between 2009 and 2022, the
number of associations increased by about 100% in Slovakia, by 8% in Germany, and in France, this number
increased by 2,8% between 2011 and 2017. Annex 4 of the IA, p. 9 and 10.
(153
) Italy, Luxembourg and Portugal.
(154
) Croatia, Czechia, Hungary and Italy.
198
fragmentation and regulatory and administrative barriers for associations, as described in the IA
(Section 2.3).
Furthermore, the need to facilitate cross-border activities and mobility of associations remains
relevant, even more so in the face of challenges going beyond national borders, where non-profit
associations bring value through their activities, such as health and social services, education and
training, or humanitarian assistance, advocating for policies, legislation, or the promotion of
fundamental rights, contributing to the democratic foundations of the Union.
Although this initiative builds on similar needs as the Commission proposal of 1992 and taking
into account the socio-political context evolution since then, it is crucial to stress that the current
initiative differs from the 1990s proposal in some substantial aspects. It is more targeted and
narrowly focused on reducing barriers to the specific cross-border aspects for associations in the
single market, while not creating a European statute for associations nor intending to affect
national traditions. Section 5 of the IA provides a clear and more detailed description on these
aspects.
199
ANNEX 10
LEGAL REGIMES OF ASSOCIATIONS IN EU MEMBER STATES
Table of Contents
1. Essential and recurrent elements of associations...................................................................195
2. Formation requirements and constitutive acts and elements................................................197
3. Registration ...............................................................................................................................198
4. Liability......................................................................................................................................199
5. Legal Personality.......................................................................................................................199
6. Membership regimes.................................................................................................................200
7. Economic Activities permitted.................................................................................................200
8. Governance, operating rules and bodies.................................................................................200
9. State supervision .......................................................................................................................201
10. Reporting and transparency ................................................................................................201
11. Resources and asset management........................................................................................201
12. Liquidation ............................................................................................................................202
200
The aim of this annex is to provide an overview on legal regimes of associations in Member States
building on the information provided in the context of the Impact Assessment Study underpinning
the preparatory work for the initiative on cross-border activities of associations in the single market
as well as the study on “Comparative Legal Analysis of Associations’ laws and regimes in the EU.
In the European Union, the legal regime for associations varies among Member States. Each
Member State has its own laws and regulations governing the formation, operation, and dissolution
of associations.
This Annex provides information on the regulatory frameworks for associations existing at the
national level and is mainly based on the study entitled “Comparative legal analysis of associations
laws and regimes in the EU” published by the Commission in September 2022, as well as on the
study prepared for this Impact Assessment. We refer to the aforesaid sources for any additional
detail concerning the information provided herein.
1. Essential and recurrent elements of associations
Box 1 Associations: fundamental characteristics
Essential elements
1. Member-based
2. Open and variable membership (admission of new members and exit of actual members do not imply
formalities and/or amendment of the statutes)
3. Non-profit purpose (non-distribution of profits to members, directors, etc.)
4. Corporate structure (including at least a members’ general assembly and a board of directors)
Additional recurrent elements
1. “Ideal” purpose (associations are not established for making profits through the carrying-out of economic
activities)
2. Asset-lock (all the assets of associations must serve its purpose, so that assets can never be distributed, not
even at member exit and upon dissolution)
3. Legal personality (associations are legal persons)
4. Limited liability (associations are liable with their assets for their debts and obligations; members and directors
are not additionally and jointly liable)
5. Entrepreneurial or non-entrepreneurial activities (associations may perform either entrepreneurial or non-
entrepreneurial activities)
Table 17: National Laws on Associations in the EU.
Member State National Laws on Associations Notes
Austria Verein
Federal Law on Associations of 2002
Belgium Association
Code of Companies and Associations of 2019
The Code also deals with
foundations,
cooperatives,
cooperatives accredited
as social enterprises,
and the European legal
forms
201
Bulgaria Асоциация
Law on Non-Profit Legal Entities of 2000
This Law also regulates
foundations
Croatia Udruga
Law on Associations of 2014
Cyprus Σωματεια
Law on Associations and Foundations no.
104(I)/2017
This Law also regulates
foundations
Czech Republic Spolek
Civil Code of 2012 (sections 214-302)
Denmark Forening
No specific legislation exists
(associations are regulated by principles developed
through case law and legal doctrine)
Limited liability associations
(foreninger med
begrænset ansvar) of
sect. 3, Law no. 249 of
1/2/2021, are those that
engage in commercial
activities for promoting,
to a not insignificant
extent, the financial
interest of their
members
Estonia Mittetulundusühing
Non-Profit Associations Act of 1996
Finland Yhdistys
Associations Act no. 503/1989
France Association
Law 1 July 1901155
Germany Verein
Civil Code of 1896 (articles 21 ff.)
Economic associations are also
provided for
Greece Σωματεíο
Civil Code of 1946 (articles 78-106)
Hungary Egyesület
Civil Code of 2013 (sections 3:63 ff.)
Ireland No specific legislation exists (associations are
regulated by case-law)
Italy Associazione
Civil Code of 1942 (articles 14-42bis)
In this group of articles of the
Civil Code the
regulation of
foundations is also
found
155
The Association Law of 1 July 1901 does not apply to the Alsace and Lorraine regions where associations are
subject to specific laws: https://www.associatheque.fr/fr/creer-association/associations-alsace-moselle.html
202
Latvia Biedrība
Associations and Foundations Law no. 161/2004
This Law also regulates
foundations
Lithuania Asociacija
Law on Associations no. IX-1969 of 22 January 2004
Luxembourg Association
Law on Associations of 21 April 1928
This Law also regulates
foundations
Malta Assoċjazzjoni
Civil Code (2nd
Schedule)
Netherlands Vereniging
Civil Code (articles 2:26-2:52)
Poland Stowarzyszenie
Law on Associations of 7 April 1989
Portugal Associação
Civil Code (articles 167-184)
Romania Asociația
Governmental Ordinance no. 26/2000
This Law also regulates
foundations
Slovakia Združenie
Act 83/1990 Coll. on Associations
Slovenia Društvo
Law on Associations of 2006
Spain Asociación
Law no. 1/2002 on the Right of Association
Associations are also regulated at
the regional level by
autonomous laws
Sweden Förening
No specific legislation exists (associations are
regulated by principles developed through
case law and legal doctrine)
Economic associations are
regulated by Act no.
2018:672, but they are,
in fact, cooperatives
2. Formation requirements and constitutive acts and elements
Most of the 27 EU Member States (18 MS in total, namely AT, BE, BG, DE, ES, FI, FR, EL, HR,
IT, LU, LV, NL, PL, PT, RO, SE, SI) require two main steps to form an association.
1) The first step concerns the formation and the signing of the association’s constitutive act
(AT, BE, BG, CY, CZ, DE, EE, ES, FI, FR, EL, HU, IE, IT, LT, LU, LV, NL, MT, PL, RO,
PT, SE, SI, SK).
2) The second step involves the request for recognition (usually a request for registration) from
the competent body (which is usually the Court of Registration, the Register of Associations,
a ministry, or public office).
Differences exist in terms of the minimum number of members that are required to form an
association:
• AT, BE, DK, EE, FR, and LV (six Member States) require only two members,
• BG, CZ, FI, IT, LT, and LU (six Member States) require at least three members.
203
• The rest of the countries (fifteen Member States) require more than three members.
Usually, a notarial deed is not mandatory to form an association, except in BE and EL in case of
donation, and in the case of IT (only for recognized associations).
3. Registration
Although registration process varies among EU Member States, four main tendencies can be
observed:
• Registration is a prerequisite to acquire legal personality (AT, BE in case of ASBL,
BG, CY, CZ, DE, DK156
, EE, FI, FR, HR, HU, IT, LT, LU, LV, MT, NL, PL in case of
registered associations, PT, RO, SI)
• Registration is not a prerequisite to acquire legal personality since the association
acquires legal personality when it is formed (SE, ES)
• Recognition by a public authority is a prerequisite to acquire legal personality and its
procedure is similar to registration (EL, BE in case of AISBL)
• Registration is required but not for acquiring legal personality since the association
cannot have legal capacity at all (SK, PL in case of ordinary associations).
Table 2: Registration of associations in each EU MS
Member State Register and Competent State Authority
Austria Register of associations, held by the Federal Ministry of Interior and its subordinate
offices
Belgium Associations must register with the competent District Court
Bulgaria Register of non-profit legal entities with the competent District Court (within the Ministry
of Justice)
Croatia Register of associations, managed by various administrative offices under the jurisdiction
of the Minister competent for general administration
Cyprus Register of associations, managed by the Registrars (district officers) coordinated by the
General Registrar (Director General of the Ministry of Interior)
Czech Republic Register of associations, administered by the competent courts
Denmark No register
Estonia Register of non-profit associations and foundations, administered by Registrars under the
Ministry of Justice
Finland Register of associations, held by the Patent and Registration Office
France Associations must publish in the Official Journal of Associations and Foundations notice
of their declaration with the Prefecture
Germany Register of associations, administered by the District Courts
Greece Register of associations, administered by the competent courts
156
In the case of DK associations are required to register in the Central Business Register (CVR), which collects
primary data on businesses in Denmark regardless of economic and organizational structure, including associations
under certain cases.
204
Hungary Associations must register with the competent Court
Ireland No register
Italy Register of legal persons (including both associations and foundations), administered by
subordinate offices (“Prefectures”) of the Ministry of Interior and the Regions
(for associations acting only in the territory of a specific Region)
Latvia Register of associations and foundations, managed by the Register of enterprises
Lithuania Register of legal entities
Luxembourg Trade and companies Register
Malta Register of legal persons
Netherlands Trade Register
Poland National Court Register (for registered associations), administered by the competent
Courts
Register of ordinary associations (for ordinary associations without legal personality),
administered by the competent Head of the District
Portugal Register of legal persons
Romania Register of associations and foundations, administered by the competent courts
Slovakia Associations must register with the Ministry of Interior
Slovenia Register of associations, administered by the competent authorities under the Ministry of
Interior
Spain Register of associations, held by the State or (some) Autonomous Communities
Sweden No register
4. Liability
The liability of the association is linked to acquiring legal personality. When the association
becomes a legal person, it has a separate legal existence from its founders and members, and it is
liable for its debts and obligations. If the association does not acquire legal personality, it cannot
be held liable for any of its own actions (this is the case in SK and PL). Therefore, the members
of the association possess all rights and obligations and are legally responsible for the association’s
actions.
5. Legal Personality
Legal personality: YES Legal personality: NO
• By registration (AT, BE in case of ASBL, BG, CY, CZ,
DE, DK, EE, FI, FR, HR, HU, IT, LT, LU, LV, MT,
NL, PL in case of registered associations, PT, RO, SI)
• By recognition of a public authority (EL, BE in case of
AISBL)
• By formation (SE, ES)
SK, PL in case of ordinary associations
205
In most EU Member States157
associations acquire legal personality upon registration in a special
register. The register can be held:
- at the government level (such as in Belgium and Bulgaria158
).
- at the level of local courts (in Germany).
6. Membership regimes
An association is a membership organization. As a general rule, a member’s entry, termination
as well as the duties and rights are to be defined in the constitutive act of the association. All
Member States acknowledge the right to freedom of association.
7. Economic Activities permitted
One of the main characteristics of associations is that they cannot be founded for the primary
purpose to carry out economic activities because they are “non-profit”. However, even if they can’t
be established for profit-making as a primary activity (unlike companies), economic activities are
not generally prohibited . The profit gained from such activities cannot be distributed among the
members since they must contribute to the main objectives of the association. This is called the
profit non-distribution constraint. Furthermore, it should be noted that - according to relevant
jurisprudence159
- the concept of economic activity does not necessarily imply a profit-making
aim, so that associations are in principle entitled to conduct economic activities despite being non-
profit entities.
8. Governance, operating rules and bodies
The legislation of all Member States defines minimum requirements for the governance system of
associations. However, the members can define the specific rules according to which the
association they formed should operate.
As structure of governance, associations have separate bodies for decision-making and
management in all Member States:
• The decision-making body
• The executive body
In addition to the above bodies, a body for the financial control of an association is also required
by many Member States (AT, CZ, DK, FI, HU, LT, LV, MT, RO, SE, SI, SK).
157
AT, BE in case of ASBL, BG, CY, CZ, DE, DK, EE, FI, FR, HR, HU, IT, LT, LU, LV, MT, NL, PL in case of
registered associations, PT, RO, SI.
158
Where the Ministry of Justice must ensure that registered associations pursue a social goal and do not cause harm
to public order.
159
See C- 179/14 para. 32-33.
206
9. State supervision
The state supervision is exercised in most jurisdictions by public bodies falling under the central,
regional or local governmental authority. The first legality control is made during the registration
of an association. The State can initiate a procedure for involuntary termination of the
association in cases of violation of duties prescribed by the national laws.
Most jurisdictions include regular (at least yearly) financial reporting to fiscal authorities and the
obligation to notify the competent authority about relevant changes (concerning e.g. the
constitutive act or personal data of the beneficial owners).
10. Reporting and transparency160
Annual reporting is mandatory in all Member States. Reporting can take several forms and
includes one or more of the following elements:
Annual budget IT, AT
Annual statements AT, BE, CH, FI, FR, EL, HU, LV, PL, SE, SI, EE, ES,FI
Keeping accounting records AT, BE, BG, CH, DE, DK, EE, ES, FI, EL, HR, HU, IE,
IT, LT, LV, MT, NL, RO, SK, PT
Annual activity reports AT, BE, BG, CZ, DK, EE, ES, HR, IE, LT, LU, LV,
MT, NL, PL, RO, SK, PT
Reports on payments AT, BE, CZ, DE, DK, EE, ES, FI, FR, HR, IE, IT, LT,
LV, MT, LV, NL, PL, RO, SE, SI, SK
Communicating the annual report AT,BE,CZ,ES,FR,HR,HU,IE,IT,LT,LV,
MT,NL,PL,RO,SK,PT, DE, SE
Publishing CZ,BE,EE
11. Resources and asset management
Associations operate with the following main types of resources:
• income from main non-profit activity (AT, BG, CH, DK, HR, HU, PL, RO, SE, SI, SK, PT)
• income from donations (AT, BE, BG, CH, CY, DK, EE, EL, HR, HU, PL, RO, SI, SK, PT)
• income from membership fees (AT, BE, BG, CH, CY, DK, EE, EL, HU, PL, RO, SE, SI,
SK, PT)
• income from other economic activities (AT, BG, CH, DK, EE, HU, PL, RO, SE, SI, SK,
PT)
• State/EU/institutional funding (CY, EL, HR, HU, PL, RO, SE, SK)
• project grants (financed by local and international foundations) (EE, HR, HU, SE, SI, SK)
• payments for products and services (EE, FI, HU, MT, PL, RO, SE, SK, PT)
• public subsidies (BE, EE, FR, HU, PL, RO, SE, SI, PT)
Specific regimes exist in some Member States for tax reduction for donors. In case a donation or
160
For further details see relevant section in the “Comparative legal analysis of associations laws and regimes in the
EU” published by the Commission in September 2022.
207
a legacy given to an association exceeds a certain amount, it has to be authorized by the Ministry
of Justice (e.g., LU, BE).
In many Member States, associations are not allowed to distribute their property or assets to their
members or other private persons (LT, LV, RO, SI, PT). In other Member States, assets can be
distributed without restriction if this is allowed by the constitutive act of the association (BG, SZ,
DK, HR, LV, SE, SK).
12. Liquidation
In most Member States, liquidation procedures are very precisely regulated (CY, EL, PT, SE, SI,
HU, IT, LT, LU, RO, BG, CH, DK, FR, SK).
In most Member States, the association ceases to exist on the day of its removal from the register
(AT, HR, LV, LT, CZ, EE, ES, FI, FR, IT, SK, PL). Another possibility for termination is that
some State bodies may ask for judicial dissolution of the association (RO). The association may
be dissolved also by the decision of the decision-making body. Liquidation may take place either
voluntarily or by court decision.
Asset distribution after the liquidation of an association is regulated by almost all Member States.
In many Member States the founders of the association or their relatives are not allowed to benefit
from the association’s assets after liquidation (BE, BG, IE, NL). It is very common that the assets
must be transferred to a non-profit entity carrying out a similar activity as the association or that
the assets are transferred to a local authority, which is obliged to utilize them for an activity that is
similar to the one pursued by the association (AT, BE, BG, CZ, DE, DK, FR, EL, HU, IE, LT, LV,
NL, SK). In some particular cases, the remaining assets are taken over by the State. Taking into
account the interests of the creditors is another important part of the liquidation process.
208
ANNEX 11
NATIONAL LEGISLATION RULES ON CROSS-BORDER ASPECTS Of
ASSOCIATIONS
1. Introduction
The aim of this Annex is to provide an overview on national legislations with regard to the
regulation of cross-border issues potentially arising when associations conduct their activities in
two or more Member States. In particular, this Annex aims to describe the state of the play by
providing information on what cross-border aspects are regulated and how by the different
Member States. It builds on the information provided in the context of the Impact Assessment
Study underpinning the preparatory work for the initiative on cross-border activities of
associations in the single market as well as the study on “Comparative Legal Analysis of
Associations’ laws and regimes in the EU.
In general, Member States do not adequately take into account cross-border issues161
when it
comes to associations’ law, despite the importance of regulating these aspects for associations
active in more than one country. Nevertheless, it is possible to find some rules at national level
that partially cover some cross-border issues and which may result, in practice, in either enabling
or undermining associations’ cross-border activities. Below the list of existing national rules,
followed by a summary table.
2. General remarks on cross-border aspects of national associations laws
As regards the possibility to operate abroad, national laws generally do not put explicit restrictions
on the capacity of national associations to conduct activities in other countries but neither regulate
the matter effectively. Nonetheless, there are some Member States where specific provisions can
be found. As to registration duties, for example, in Croatia162
, Cyprus and Romania163
it is
expressly provided that foreign associations must register in order to operate in the country.
Furthermore, associations in Slovakia must have a Slovak legal form to acquire legal personality.
Another case that emerged from the Impact Assessment study is that of Greece and Spain, where
foreign associations must establish and register a branch if they operate in the country on a stable
basis. Differently, in Latvia, Lithuania and the Netherlands foreign associations may freely
161
By “cross border issues” it is referred to the issues related to the establishment in another Member State, to the
transfer of seat in another Member State, to the merge with an association governed by the law of a different
Member State, to the division in associations located in another Member State, to the recognition of the public
benefit status and to the receipt of funds from abroad.
162
Registration in the register of foreign associations is a condition for operating in the country and also for being
recognized for tax purposes.
163
Foreign non-profit legal entity must register in the Register of associations and foundations to be recognized in
Romania.
209
operate. In some cases, the national law states the right to have a branch abroad, as it is the case in
Bulgaria, Croatia and Cyprus. Alternatively, the adherence to the “State of Incorporation
doctrine164
by a Member State (like in the case of Belgium and the Netherlands) substantially
contribute to enable an entity to operate165
.
As to the cross-border conversion, in the face of countries like Luxemburg, Portugal and Italy
where the law provides that associations may transfer their registered office abroad without losing
their legal personality166
, some other countries such as Austria and Germany require that the seat
of an association be established in their territory, since the transfer of the head office abroad is
formally considered as cause for dissolution of the association. Finally, in Belgium and Czech
Republic it is possible to find specific rules governing the cross-border conversion, which further
take into account the interests of creditors and dissenting members.
Another essential aspect is the possibility for a foreign association to convert into a national form,
as well as to merge and divide across borders. In this respect, a general lack of regulation at
national level is confirmed, except for some cases such as Belgium, Bulgaria, Czechia, Estonia
and Latvia where a foreign association is allowed to convert into a national legal form. Italy and
Portugal provide for some very generic rules allowing, in principle, the merger and division of
foreign associations, while Estonia prohibits mergers and divisions of associations not registered
in the national register, which provision particularly affects foreign associations. An interesting
case is that of France, Germany and Netherlands, where it is commonly accepted that associations
qualify as companies within the meaning of Article 54 TFEU.
In matter of membership, it has to be noted that foreigners who are resident in Poland may not
establish an association, given that they may only join it after its establishment167
. Likewise, in
Finland, the chairperson of the executive committee of an association must be resident in Finland
unless the Registration Authority grants an exception168
.
As to the recognition of the Public Benefit status of foreign associations, national laws generally
provide that this status - and the associated benefits (also under tax law) - may be acquired by
164
According to this doctrine, an entity is governed by the laws of the jurisdiction in which it has been incorporated
or registered, regardless of where it operates in practice. This implies that activities conducted abroad cannot
affect negatively the existence of the entity, which will continue to exist seamlessly (differently from what
happens under the “real seat” doctrine).
165
According to a contribution to the EC Consultation (made by Philanthropy Europe Association) some NPOs -
namely foundations - are already faced with the application of either the “real seat doctrine” or the “state of
incorporation doctrine”. In particular. the former focuses on the principal place of business of a foundation (i.e.
where the fundamental decisions by the foundation’s management are being implemented effectively into day-
to-day activities), while the latter refers to the state in which the foundation has been incorporated or registered.
Both doctrines are individually meant to determine, by means of different approaches, which State has the power
to govern the internal affairs of that entity.
166
Provided that the State of their new registered office recognizes the continuation of this legal personality (LU, PT)
and that the transfer of seat is carried out in accordance with the laws of the States concerned (IT).
167
See art. 4 Law of 1989.
168
See sect. 35, para. 3, Act of 1989.
210
foreign associations if they meet the requirements laid down by the law (this is the case in AT, BE,
HR, CZ, DK, FI, FR, DE, IE, LV, LT, LU, MT, PL, RO, SK, ES, SE). Nevertheless, in some cases,
a specific registration or a territorial link with the Member State concerned is required, in
particular:
• In BG, foreign non-profit legal entities may pursue activities for public benefit but only through
their branches in the country in compliance with the applicable law.
• In EE, foreign entities must be registered in Estonia to obtain the status and related benefits.
• In IT, foreign associations must be registered in the register of third sector entity.
• In NL, foreign entities may apply for the ANBI status, which requires registration as such with
the tax authorities.
• In PT, non-profit foreign legal persons must have a permanent representation on Portuguese
territory, comply with the requirements of public utility set out in Portuguese law and,
moreover, the benefits resulting from the public utility status apply exclusively to activities
developed in Portugal.
In some other cases, the public benefit status is not recognized to foreign entities even if they are
registered in the host country. This is the case in Cyprus, Slovenia (where natural persons may
donate only to associations listed in a list of beneficiaries held by the Government, where only
Slovenian associations may be enrolled), Greece and Hungary (where the condition for an
association to have the public benefit status is to have its seat in, respectively, EL or HU).
Finally, as to the possibility to receive donations from abroad, in certain countries there exist
restrictions on either donations from abroad (see Germany and France) or on donations overall,
but which inevitably affects also and foremost donations from abroad. The concerned countries
are: Cyprus (where it is provided that the board of directors of an association must disclose
information of the donors, as no revenue shall be received unless the source of its origin is known),
Germany (where, even if there are no restrictions, additional duties of care may arise for banks or
accountants if transactions involve high risk third countries), France (where religious associations
must declare foreign resources in excess of EUR 10 000, while other associations must declare all
foreign funding above EUR 153 000 in annual donations), Greece (where there is an obligation for
associations to disclose donations exceeding 1 000 euros) and Belgium and Luxemburg (where
state approval is required for donations above a certain threshold – respectively above EUR 100
000 and 30 000).
211
3. Summary table169
169
The sources of the information here provided are the Impact Assessment Study as well as the study on
“Comparative Legal Analysis of Associations’ laws and regimes in the EU”.
170
National laws allow national association to establish a branch in another Member State.
171
Foreign associations must establish and register a branch if they operate in the country on a stable basis.
172
In this case there is no obligation to establish a branch in the host country but once the branch is created it must be
registered (this is a potential obligation rather than a general one).
173
The association’s center of administration cannot be located abroad (the registered office or seat shall coincide with
the main center of administration) because this would cause the dissolution of the association.
174
See art 14:51 ff of the “Code of companies and associations”.
175
See art 139–142 of the Civil Code.
Cross-border aspects Member States concerned
Membership limitations PL, FI
Obligation to register foreign associations HR, CY, RO
BRANCH
Right to have a branch abroad170
BG, HR, CY (by law) + BE, NL (by doctrine)
Obligation to establish a branch and register it171
EL, ES
Obligation to register the branch (only if it
exists172
)
LV, LT, NL
CONVERSION
Restrictions to cross-border conversion173
AT, DE
Right to cross-border conversion LU, PT, IT
Specific procedural rules on the cross-border
conversion
BE174
, CZ175
Rules on the domestic conversion of foreign
associations
BE, BG, CZ, EE, LV, IT, HR
MERGER
AND
DIVISION
Rules hindering merger and division of foreign
associations
EE
Rules allowing cross-border merger and
division of associations
IT, PT,
212
* A specific registration or a territorial link to the MS is required in order to be recognized as Public Benefit
organization (e.g. the association must operate with branches in the host country, or must be registered in the
host country, or its seat must be in the host country etc.).
**In general, national laws provide that the status of public utility may be acquired by foreign associations if
they meet the legal requirements for the status.
PUBLIC
BENEFIT
Public benefit status’ recognition to foreign
associations
NO (CY, EL, HU, SI), YES IF* (BG, EE, IT,
NL, PT), YES**(AT, BE, HR, CZ, DK, FI,
FR, DE, IE, LV, LT, LU, MT, PL, RO, SK,
ES, SE)
DONATIONS
Transparency obligation on donations CY, EL, FR
Other possible administrative controls linked to
receipt of donations from abroad
DE
State approval required for donations above a
certain threshold
BE, LU
213
ANNEX 12
NOTION OF PUBLIC BENEFIT STATUTS (OR EQUIVALENT NOTION)
IN MEMBER STATES
This Annex presents the notion of ‘Public benefit’ which is commonly used when describing the
activity of associations (and other organisations), and which generally implies that the association
is meant to serve with a “worthy purpose” for the “broader public.” A non-profit purpose is the
main part of the notion of public benefit related to associations as it is explicitly required in order
to benefit e.g. from a privileged fiscal status, such as tax-exemptions as regulated in national laws.
The Non-profit purpose, is interpreted as a purpose other than profit-sharing and implies the
profit non-distribution constraint, meaning that associations are not allowed to distribute their
potential profits to members, directors, etc, but must use profits in the pursuit of their institutional
purpose. This means an association with a public benefit status must always follow a non-profit
purpose. However, a non-profit association must not necessarily follow a public benefit purpose.
Although the majority of Member States refer to “public benefit”, there is also a variety of terms
referring to it such as: common interest, public interest, general interest, public utility, charitable
purpose, or philanthropic and interest for the public good.
The public benefit status is characterised not only by the variety of denominations in Member
States, but also by the plurality of public benefit statuses that are identified for different purposes
(taxation, access to public grants, public collection of funds, etc.176). In some countries, these
statuses of public benefit are even structured under one general status that includes more specific
public utility statuses (for example, in Italy, Portugal and Spain).
With regard to the national legislation on the public benefit status, regardless of the way it is
identified and denominated by national law (public benefit, third sector, civil society, charitable
status, etc.), and independently of the place in which its regulation is found (in organizational law
(as happens in France and Italy), or exclusively in tax law (which is the case in other countries
such as Austria and Germany), all 27 Member States have laws providing for such a status (see
Table 1).
Furthermore, the public benefit status is usually acquirable not only by associations but also by
other legal types of organizations, such as foundations, companies and cooperatives, provided
they meet the mentioned requirements for qualification. This may also lead to recognizing as
public benefit organizations social enterprises in the shareholder company form (which is the case
in Italy).
From a comparative analysis conducted in the IA study, it appears that Member States devote
increasingly more attention to the public benefit status with regard to its relevant legislation. In
176
E.g., in Finland and Spain.
214
2021, new laws were enacted in several Member States, including Denmark, Greece and Portugal.
A general reform of third sector organizations took place in Italy in 2017 while tax-privileged
donations to public benefit organizations have been reintroduced in Sweden, after having been
previously abolished.
The status of public benefit is based on the possession of requirements, in the sense that only the
associations that meet these requirements may obtain and maintain the status, and thus benefit
from a specific treatment reserved for this category of organization.
The most common requirements are related to the field of activity associated with the “worthy
purpose” defined in the constitutive act of the association (e.g. culture, education, health care,
social protection, implementation of family policy, protection of human rights, protection of the
environment, protection of animals, sports) and with the engagement to benefit the society or a
specific part of it.
Additional requirements exist and they usually relate to one or several of the following
requirements: proof of a minimum number of members or income per year, the significance of
results achieved, influence and reputation exceeding the local scale, or a minimum duration of
existence before applying for public benefit status.
1. Legal requirements for obtaining the public benefit status
The status of public benefit is also based on the possession of some legal requirements, which are
necessary to meet in order to obtain the status177:
• The acquisition of the status is in most countries subject to the association’s registration in
certain registers of public benefit organizations.
• The status is obtainable by organizations set up in different legal forms (e.g., foundations,
cooperatives, companies) and in principle also available to associations without legal
personality.
• Pursue of a public benefit purpose. In some cases, national laws provide a list of these
purposes (e.g., Germany and Ireland), or activities that must be pursued (e.g., Italy).
• Subject to specific governance and transparency requirements (imposed on the entity for
ensuring its compliance with the requirements for the status, thereby preventing potential
violations of the applicable law.)
• Associations that hold the status often recipient of promotional tax treatment (France and
Ireland, only a portion of them, formed by organizations that meet further requirements)
• Other measures are provided by law in support of public benefit associations, e.g. eligibility
for tax-privileged donations.
177
It must be clear, however, that not all the requirements are present in all national laws and that for each requirement
different regulations may be found in national laws.
215
On the possibility to be recognized as of public utility, national laws generally provide that the
status of public utility, and the associated benefits (also under tax law), may be acquired by
foreign associations if they meet the legal requirements for the status by the host country
(with exceptions existing in Cyprus, Greece and Slovenia). On this point, the main problem resides
in the procedures and criteria that are applied at the national level to verify that the foreign
association meets the necessary legal requirements.
2. Principle of non-discrimination established by CJEU case-law
When it comes to the public benefit status enjoyed by associations in the Member State where they
are domiciled, mutual recognition of the said status does not exist. The CJEU has established a
principle of non-discrimination in its case law, concerning public benefit organisations.178. In a
sentence, the said case law “entitles EU-based foreign public benefit organisations (PBO) to hold
the same tax-privileged status as a national entity, provided that it can be shown to be comparable
to a national public benefit status179.
The “comparability test” is complex, uncertain and based on the capacity of the donor or the
recipient association to prove it, which results in a serious obstacle to the cross-border activity of
public benefit associations. Then, the matter is left to the competent administrative authorities that
resolve it in different ways leading to costly and lengthy procedures for associations. However,
best practices in this regard are those applying in the Netherlands and Luxembourg.180
As announced in the Social Economy Action Plan of December 2021, the Commission will issue
a set of two Staff Working Documents on relevant taxation frameworks for social economy entities
and on non-discriminatory taxation of charitable organisations and their donors181 (see Annex 9
for more details). These two documents will be part of the Social Economy package together with
the legislative initiative on cross-border activities of associations and will specifically address tax-
related barriers encountered by associations (and other legal forms) which are not tackled by the
initiative on cross-border activities of associations (as explained in Section 1 and 2 of the IA report
and in Annex 9).
***
Table 1: Public Benefit (or Equivalent) Status in the laws of the Members States of the European Union
178
See “Taxation of cross-border philanthropy in Europe after Persche and Stauffer, From landlock to free
movement?”, European Foundation Centre 2014.
179
Cf. Laboratoires Fournier (C-39/04) of 2005; Centro di musicologia Walter Stauffer (C-386/04) of 2006; Hein
Persche (C-318/07) of 2009; Missionwerk (C-25/10) of 2011; European Commission v Austria (C-10/10) of 2011.
180
See Circulaire L.I.R. 112/2 of the 7th
of April 2010.
181
Relevant taxation frameworks for Social Economy Entities - Staff working document (2).pdf and Non-
discriminatory taxation of charitable organisations and their donors - Staff working document (1).pdf
216
Member State Public Benefit (or Equivalent) Legal Status Notes
Austria Associations with Public Benefit, Charitable and
Religious Purposes of Sect. 34 ff. of the Federal
Tax Code
Also applicable to other NPOs,
including shareholder companies,
meeting the relevant legal
requirements
Belgium Accredited Associations of Art. 154/33 of the
Income Tax Code of 1992
Also applicable to other NPOs
meeting the relevant legal
requirements
Bulgaria Non-Profit Associations Pursuing Activities for
Public Benefit of Arts. 37 ff. of the Law on Non-
Profit Legal Entities of 2000
Also applicable to other NPOs.
Associations may also acquire the
status of “social enterprise” under the
relevant national law
Croatia Associations Pursuing Activities for Public Benefit
of Arts. 32 ff. of the Law on Associations of 2014
Association recipients of 2 percent
deduction in the Income Tax to be
verified with the NE …
Cyprus Charitable Associations of Art. 9(1)(f) of Income
Tax Law no. 118(I)/2002
Also applicable to other NPOs,
including non-profit limited liability
companies
Czech Republic Public Benefit Associations of Sect. 146 of the
Civil Code of 2012 and Associations of Sects.
15(1) and 20(8) of Income Tax Law no. 586/1992
Also applicable to other legal persons
Denmark Public Benefit Associations of Sect. 8A of Law no.
1735 of 17/8/2021 (Income Tax Law)
Also applicable to other non-profit
legal persons
Estonia Public Benefit Associations of Sect. 11 of the
Income Tax Act of 1999
Also applicable to other non-profit
legal persons
Finland Public Benefit Associations of Sect. 22 of Income
Tax Act no. 1535/1992
Also applicable to other non-profit
legal persons
France Public Benefit Associations of Art. 11 of Law 1
July 1901
Germany Associations pursuing public benefit, charitable or
religious purposes of Sects. 51 ff. of the Tax Code
of 1976
Also applicable to other non-profit
legal persons, including shareholder
companies and cooperatives
Greece Civil Society Associations of Law no. 4873/2021 Also applicable to other non-profit
legal persons
Hungary Public Benefit Associations of Sect. 32 of Law no.
CLXXV of 2011 on the right of association, the
public benefit legal status, and the operation and
support of civil society organizations
Also applicable to other NPOs,
including companies
Ireland Charitable Associations according to the Charities
Act of 2009
Also applicable to other legal entities,
including non-profit companies
Italy Associations with the Status of Third Sector
Organizations according to the Code of the Third
Sector (Legislative Decree no. 117/2017)
Also applicable to other NPOs,
including shareholder companies and
cooperatives, meeting the relevant
legal requirements.
Within this legal framework,
associations may also acquire the sub-
status of “social enterprises”, which is
available also to entities established in
other legal forms (including
companies and cooperatives)
Latvia Public Benefit Associations of Law no. 106/2004 Also applicable to other NPOs
Lithuania Public Benefit Non-Governmental Associations of
Law no. XII-717 of 19 December 2013
Also applicable to other NPOs
217
Luxembourg Public Benefit Associations of Art. 26-2 of Law on
Associations of 21 April 1928
Malta Associations Recognized as Voluntary
Organizations according to Act no. XXII of 2007
Also applicable to other NPOs,
including companies
Netherlands Associations with the Status of Public Benefit
Institutions
Foundations can also be recognized as
Public Benefit Institutions
Poland Public Benefit Association of Act of 24 April 2003
on Public Benefit Activity and Volunteerism
Also applicable to other NPOs,
including companies
Portugal Associations with the Public Benefit Status
according to Law no. 36/2021
Also applicable to foundations and
cooperatives
Romania Public Benefit Association of Art. 38 of
Governmental Ordinance no. 26/2000
Also applicable to other NPOs
Slovakia Associations Recognized as Non-Profit
Organizations according to Act no. 213/1997
Slovenia Associations with the Status of Non-Governmental
Organizations in the Public Interest of Law of 2018
Also applicable to other NPOs
Spain Public Benefit Associations of Art. 32 ff. of Law
no. 1/2002
Sweden Public Benefit Association of Chap. 7, Sect. 3 ff.,
of Income Tax Act no. 1999:1229
Also applicable to other NPOs
Source: IA study
218
ANNEX 13
DISCARDED POLICY OPTIONS AT AN EARLY STAGE
The aim of this Annex is to describe the policy options that have been discarded at an early stage
of the Impact Assessment182
, which are:
- Non-legally binding options (i.e. Council recommendations, information campaigns, and
guidelines);
- European legal status for public-benefit associations;
- Harmonization of common standards for associations.
Further details are developed below.
1. Non-legally binding options, such as Council recommendations, information
campaigns, and guidelines
Under non-legally binding options, including information campaigns and Council
recommendations and guidelines, associations would continue to be governed exclusively by their
national laws even when operating across borders. According to the study underpinning this
Impact Assessment, many European associations consider non-legislative options as presented
here a supportive option to complement and accompany other legislative and policy measures as
part of an overall roadmap to support civil society and the promotion of fundamental rights at
national and EU level, but they have been discarded for the reasons stated below.
A Commission-led information campaign could raise awareness about the rights and obligations
of associations in cross-border contexts, and about the rights and obligations of Member States
with regard to associations operating cross-border or with cross-border membership. A drawback
of this approach is the absence of comprehensive rules that would apply consistently in cross-
border contexts. Rather, rules vary depending on the applicable Member State laws in question.
Ultimately, awareness raising might increase the cooperation among Member States concerning
associations, as well as stimulate cross-border activity to an extent. The problem and the related
barriers would however likely remain.
The Commission could propose a Council Recommendation on developing the national legal
frameworks for associations, with an aim of facilitating cross-border activity. This could
recommend Member States to facilitate the cross-border activity of associations in various ways,
including their capacity to receive donations from abroad; facilitate the recognition of foreign
associations’ legal personality across Member States, in general; and to recommend principles of
non-discrimination and good administration, so as to facilitate cross-border activities. As described
above, the Commission is already working on a proposal toward framework conditions for the
social economy overall, including concerning associations, as announced in the Social Economy
182
See the Impact Assessment study.
219
Action Plan. From the perspective of this proposal, the said action is complementary, depending
on its final content. However, it will not resolve the problem.
Guidance by the Commission could be particularly relevant in areas with limited legislative
competences. Taxation is an area that has particular relevance for associations. Due to their non-
profit nature, they are often eligible for tax privileges. When operating in cross-border contexts,
they risk forfeiting the said privileges, which discourages donations (if the donor cannot access
the tax deduction) and may cancel out their comparative advantage vis-à-vis companies, when it
comes to providing services (if the VAT exemption ceases to apply). The Commission is already
working on guidance clarifying the existing rules on the tax treatment of cross-border public
benefit donations affecting foundations and associations and the implementation of the principle
of non-discrimination with Member States, as announced in the Social Economy Action Plan. This
measure is complementary, but does not resolve the problem.
Overall, the impact of the non-legislative options is not without precedent. The Council of Europe
has adopted both a Convention and issued Recommendations to improve the possibilities for
international non-governmental organisations, associations included, to operate across its
membership. These measures have only seen very modest uptake, as mentioned above and the
same can be expected of non-binding measures at EU level.
Non-binding options may enjoy political support, but lack in effectiveness. The identifies problem
will persist and thus for the lack of effectiveness, further non-binding measures do not seem
meaningful in addition to those that are already in the pipeline, as described.
2. Creating a European legal status for public-benefit associations
Under this option, legislative provisions could require Member States to introduce into their legal
systems a European public benefit status similar to that of “public benefit status” already existing
in almost all Member Status, which serves to grant preferential treatment primarily for taxation
(i.e. income tax, donations, VAT) and other areas (state aid, public procurement). This status is
not a legal form, but rather a label, which may be obtained by associations, based on fulfilling
certain criteria.
In practice, this would entail creating a definition at EU level for a public benefit status purpose,
based on certain criteria. The European status would then be recognized by all Member States in
which the association is active, leading to eligibility to all benefits, including tax benefits. It would
address key aspects, in particular related to the free movement of capital, that current burden
associations in cross-border contexts. This approach to public benefit was proposed by the
Commission as a part of its proposal for a Statute for a European Foundation and is also included
in the European Parliament proposal to the Commission in the context of this initiative.
Feasibility for this option is low, although it would help addressing one of the problem drivers.
This option affects taxation practices and is therefore of limited competence for the EU.
220
3. Harmonization of common standards for associations
Under this option, a legislative instrument would harmonize aspects of association law throughout
the Union. The purpose would be to ensure a level playing field and to ensure associations a secure
civic space. Unlike retained option 2, this harmonization would not be targeted at only elements
essential for facilitating cross-border activities and mobility,183
but at approximating association
law more broadly.
Elements subject to harmonization could include mutual recognition of legal personality, non-
discrimination and equal treatment in providing goods and services and receiving capital,
governance, membership, registration, criteria for obtaining public benefit status, mergers, transfer
of seat, reporting. Harmonisation could set minimum standards or alternatively set standards as
maximum for Member States law on associations.
Feasibility of this option is low. Member States have strong national cultural and historic roots
embedded in their association law and the appetite for harmonization is unlikely. Moreover, this
would require adjustment costs for all associations.
183
Policy option 2, as outlined in Section 5 of the IA, differs from this discharged option as it would rather harmonise
common minimum standards for the cross-border activities and mobility of associations across Member States by
virtue of a directive under Articles 114 and 50 TFEU, would harmonise national association laws to the extent
needed to facilitate cross-border activities and mobility, and would introduce standards to ensure for example
cross-border conversions, principles and safeguards on the process of cross-border mergers and divisions, non-
discrimination when it comes to associations as service providers and/or capital transfers receivers in cross-border
contexts, etc.
221
ANNEX 14
LIST OF FIGURES, TABLES, AND BOXES
Figure 1: Overview of common legal forms and statuses present in the non-profit sector, the social
economy, and the third sector.
Figure 2: Problem statement.
Figure 3: Barriers encountered by associations operating cross-border.
Figure 4: Tree table of the problem definition.
Figure 5: Tree table of the links between problems and objectives.
Figure 6: Intervention logic.
***
Table 1: Overall estimates of the number of NPOs and associations in the EU-27.
Table 2: Stakeholders’ views on the need to operate and perform activities in other Member States.
Table 3: Estimated total number of associations and number of cross-border associations at EU
level.
Table 4: Estimated contribution of cross-border associations to the EU GDP (2021).
Table 5: Different scenarios of associations that could realistically consider operating cross-border
in the event of sufficient policy intervention (as a share (%) of “current cross border associations”
of 310 000 associations).
Table 6: Summary of best estimates for associations operating and potentially operating cross
border.
Table 7: Excess cost for associations operating cross-border (recurrent).
Table 8: Estimated economic benefits regarding the unlocking potential of cross-border activity of
associations (scenario A).
Table 9: Estimated economic benefits regarding the unlocking potential of cross-border activity of
associations (scenario B).
Table 10: Excess cost reduction per year (for the assessed timeframe of 15 years).
Table 11: Excess cost reduction per year (for the assessed timeframe of 15 years).
222
Table 12: Excess cost reduction per year (for the assessed timeframe of 15 years).
Table 13: Comparison of the impacts of each policy option relative to the baseline.
Table 14: Comparison of PO1(a and b), PO2, and PO3.
Table 15: Excessive costs reduction related to the ‘One In One Out’ (OIOO) assessment.
Table 16: Objectives and Indicators.
***
Box 1: Non-profit sector and social economy entities and types of associations excluded from the
scope of this initiative and not assessed in this IA.
Box 2: Treatment of data constrains on associations in the market context.
Box 3: Treatment of data constrains on associations in the problem definition.
Box 4: Associations present in Interreg Cross-Border Programmes.
Box 5: Example of restrictions for an association to receive donations.
Box 6: Example of an association facing various challenges in border regions.
Box 7: Example of burden resulting from absence of recognition of an association’s legal
personality.
Box 8: Examples of excessive administrative practice.
Box 9: Treatment of qualitative and quantitative analysis regarding the impact of the policy
options.


EN EN
EUROPEAN
COMMISSION
Brussels, 5.9.2023
SWD(2023) 293 final
PART 1/2
COMMISSION STAFF WORKING DOCUMENT
IMPACT ASSESSMENT REPORT
Accompanying the document
Proposal for a Directive of the European Parliament and of the Council
on European cross-border associations
{COM(2023) 516 final} - {SEC(2023) 306 final} - {SWD(2023) 292 final} -
{SWD(2023) 294 final}
Offentligt
KOM (2023) 0516 - SWD-dokument
Europaudvalget 2023
1
Table of content
1. INTRODUCTION .....................................................................................................6
1.1 Scope of the initiative 8
1.2 Political context 9
1.3 Legal context 12
1.4 Market Context 14
2. PROBLEM DEFINITION......................................................................................17
2.1 Preliminary remarks 17
2.2 What is the problem? 19
2.3 What are the problem drivers? 26
2.3.1 Driver 1: Key cross-border aspects for associations are either unregulated or regulated
in varying ways in each EU Member State 26
2.3.2 Driver 2: Lack of mutual recognition of legal personality of an association when
operating cross-border 28
2.3.3. Driver 3: Excessive administrative practices and processes when operating cross-
border 30
2.4 How likely is the problem to persist? 31propo
3. WHY SHOULD THE EU ACT? ............................................................................33
3.1 Legal basis 33
3.2 Subsidiarity: Necessity of EU action 34
3.3 Subsidiarity: Added value of EU action 34
4 OBJECTIVES: WHAT IS TO BE ACHIEVED?.................................................35
4.1 General objectives 35
4.2 Specific objectives 36
5 WHAT ARE THE AVAILABLE POLICY OPTIONS?......................................36
5.1 What is the baseline from which options are assessed? 36
5.1.1 Socio-economic context 37
5.1.2 Costs of operating cross border (baseline) 38
5.1.3 EU level action 41
5.1.4 International level 42
5.2 Description of the policy options 42
5.2.1 Option 1: Establish an EU-level legal form of association 43
5.2.2 Option 2: Harmonise common minimum standards for cross-border activities of
associations 46
2
5.2.3 Option 3: Create at Member State level an additional legal form of association
designed for cross-border purposes (“the cross-border association”) and recognised by
Member States
47
5.3 Options discarded at an early stage 49
6 WHAT ARE THE IMPACTS OF THE POLICY OPTIONS?...........................50
6.1 PO1a and PO1b: Establish an EU-level legal form of association: ‘the European
Association’ (PO1a)” or ‘The European cross-border Association’ (PO1b) 59
6.1.1 Economic impacts on associations 60
6.1.2 Indirect economic effects 61
6.1.3 Impacts on Member States 62
6.1.4 Stakeholders’ views on policy option 1 62
6.1.5 Specific impacts related to Policy option 1b: EU level legal form covering cross-
border aspects: ‘The European cross-border Association’ 63
6.2 PO2: Harmonisation regarding common minimum standards for cross-border activities
of associations 65
6.2.1 Economic impacts on associations 65
6.2.2 Indirect economic effects 67
6.2.3 Impacts on Member States 67
6.2.4 Stakeholders’ views on policy option 2 68
6.3 PO3: Creation of an additional national legal form of association designed for a cross-
border membership and/or cross-border purposes or activities 68
6.3.1 Economic impacts on associations 69
6.3.2 Indirect economic impacts 70
6.3.3 Impacts on Member States 71
6.3.4 Stakeholders’ views on policy option 3 71
7 HOW DO THE OPTIONS COMPARE? ..............................................................71
8 PREFERRED OPTION ..........................................................................................78
9 HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED? .81
ANNEXES ........................................................................................................................83
3
Glossary
Term or acronym Meaning or definition
CJEU Court of Justice of the European Union
CSO Civil Society Organisations
EESC The European Economic and Social Committee
EU European Union
FTE Full Time Equivalent (employment)
GDP Gross Domestic Product
IA Impact Assessment
MS Member State
NGO Non-governmental organisation
NPO Non-profit/not-for profit organisation
R&D Research and Development
SDGs (UN) Sustainable Development Goals
SME Small and medium sized enterprise
TEU Treaty on the European Union
TFEU Treaty on the Functioning of the European Union
UN United Nations
VAT Value added tax
Main working definitions
Cross-border activity This refers to, in particular, the following aspects of EU-based associations
across Member States: (i) conducting economic activities (including the
4
provision of goods and services) in a Member State other than the one of it
domicile or in multiple Member States; (ii) sending and receiving capital in
another Member State (i.e. membership fees, funding, donations); (iii) having
members or board members who reside in another Member State than the one
of the association’s domicile.
Cross-border conversion This refers a situation where an association, without being dissolved or wound
up or going into liquidation, converts its legal form under which it is domiciled
and registered in a Member State into a legal form of another Member State
and transfers at least its registered office to the said destination Member State,
while retaining its legal personality.
Cross-border division This refers to situations where: (a) an association being divided, on being
dissolved without going into liquidation, transfers all its assets and liabilities
to two or more recipient associations in different Member States; (b) an
association being divided transfers part of its assets and liabilities to one or
more recipient associations in different Member States.
Cross-border governance role This refers to members of statutory management bodies of an association, such
as a board of directors, supervisory board, or executive committee, who reside
in another Member State than where the relevant association is domiciled.
Cross-border merger This refers to situations where (a) one or more associations domiciled in
different Member States, on being dissolved without going into liquidation,
transfer all their assets and liabilities to another existing association, the
acquiring association; or (b) two or more associations domiciled in different
Member States, on being dissolved without going into liquidation, transfer all
their assets and liabilities to an association that they form, the new association.
Cross-border membership This refers to a situation where a member of an association resides in another
Member State than the one where the relevant association is domiciled.
Cross-border mobility This refers, in particular, to (i) a conversion of an association involving
transferring its registered office to another Member State; (ii) when an
association wants to merge with or divide from an association in another
Member State.
Recognition of legal personality This refers to the situation where an association, which has legal personality in
the Member State where it is domiciled, has therefore legal personality in all
Member States.
Social economy The social economy is an umbrella term covering a wide range of private
entities, with profit-making or non-profit making purpose, that prioritise
people, social, and environmental causes over profit. While the scope and the
terms used to describe the social economy concept can vary depending on
national traditions, it typically comprises cooperatives, mutual benefit
societies, associations (including charities), foundations, and social enterprises
(with different legal forms).
Third sector Although there is no common definition, it usually embraces institutional and
individual-action components that embody, in general, three underlying
attributes: a) private, b) primarily oriented to the public good and c) unpaid
non-compulsory work. Non-profit organisations are at the core of the third
sector. However, the third sector is wider and encompasses the non-profit
5
sector, also including the social economy and uncompensated work performed
through third sector organizations.
Non-profit sector It includes entities that do not operate for the benefit of themselves but use
profits in the pursuit of their purpose.
Non-profit organisations Entities operating in the non-profit sector not meant to operate for the benefit
of themselves, but that must use profits in the pursuit of their purpose.
Legal statuses/qualifications They are created by national laws with the intention of awarding an
accreditation scheme that can be adopted by the organisations that meet the
requirements and must be distinguished from the notion of “legal form”. A
variety of entities, including foundations, companies and cooperatives that
meet the necessary legal requirements can adopt the status – for profit and non-
profit.
6
1. INTRODUCTION
The non-profit sector
The non-profit sector is instrumental for bringing together the social, green and digital
objectives of the European Union. It does so by showing “another way” to generate value and
meet societal needs that the market and, in some areas, the State cannot address.1
For instance,
the non-profit sector enables grassroots initiatives to emerge and contributes to face challenges
such as, more recently, the COVID-19 pandemic and the crisis originated by Russia’s
aggression in Ukraine, while it can also help ensure a just green transition for all parts of the
society.2
Unlocking the potential of the non-profit sector can strengthen its positive role in
generating value in economic and societal terms across the European Union. It can also help
underpin civic participation, EU values and fundamental rights.
The legal form of association
Out of almost 4.6 million organisations within the non-profit sector at EU level around 87%
(3.87 million) have the legal form of associations.3
Associations are also the largest in number
of the four legal forms traditionally encompassed by the social economy,4
which includes both
non-profit and profit-making entities with or without economic activities that prioritize social
or public interest goals and share common principles and features.5
Associations are also
present in the so called third sector.6
It is important to note that, in some Member States, there
are legal statuses connected, for example, with fiscal privileges or access to public funding,
which associations may decide to acquire in addition to their legal form, provided that they
1
The non-profit sector is not strictly defined because the entities therein are very diverse and the rules outlined
for members of this sector can vary depending on the country in which they are established. The common feature
identifying entities in the non-profit sector is that they are not meant to make benefit for themselves, but they must
use profits in the pursuit of their purpose.
2
According to a recent Eurobarometer survey on “Fairness perceptions of the green transition”, 88% of EU
citizens agree that the green transition should not leave anyone behind (Special Eurobarometer 527, October
2022). Survey available at: Fairness perceptions of the green transition - Eurobarometer survey (europa.eu).
3
These figures were developed in the context of the independent study supporting this impact assessment
(hereinafter “IA study”). Concerning the figure of 87%, this is calculated based on Member State sources for
number of associations and NPOs. The basis for this figure is very robust as most Member States have recent and
reliable data. The relative number of organisations per country is factored in to yield the weighted average, see
Annex 4 (Section 2.1). Placeholder for publication reference to the IA study when available
4
Communication from the Commission to the European Parliament, the Council, the European Economic and
Social Committee and the Committee of the Regions ‘Building an economy that works for people: an action plan
for the social economy’ of December 2021. Hereinafter “the Social Economy Action Plan”. The other legal entities
present in the social economy are cooperatives, mutual benefit societies (or mutuals) and foundations.
5
According to the Social Economy Action Plan, the social economy covers entities sharing the following main
common principles and features: the primacy of people as well as social and/or environmental purpose over profit,
the reinvestment of most of the profits and surpluses to carry out activities in the interest of members/users
(“collective interest”) or society at large (“general interest”) and democratic and/or participatory governance.
6
There is no common definition of the “third sector” which embraces institutional and individual-action
components that embody, in general, three underlying attributes: a) private, b) primarily oriented to the public
good and c) unpaid non-compulsory work (volunteering). Non-profit organisations are at the core of the third
sector. However, the definition of the third sector is wider and encompasses in addition to non-profit
organisations the social economy and uncompensated work performed through third sector organizations
(volunteerism). Beyond Non-profits: In Search of the Third Sector, Lester M. Salamon & Wojciech Sokolowski,
2018.
7
satisfy specific requirements for such qualifications and depending on the jurisdiction where
they operate.7
Figure 1 provides an overview of the legal forms commonly present in the social economy )
the non-profit sector and the third sector, as well as the legal statuses (or qualifications) that
associations may decide to acquire. Annex 9 provides more information on the legal forms in
the social economy and the non-profit sector.
Figure 1: Overview of common legal forms and statuses present in the non-profit sector, the social economy and
the third sector.
Non-profit associations are membership-based legal forms that may or may not perform
entrepreneurial/economic activities, serving a collective or social interest or public benefit, and
any revenues they generate exceeding expenses must be committed to the entity’s purpose
(contrary to entities operating as a business aiming to generate profit and distribute it to it
owners or shareholders). Associations are active in all Member States, where they provide
goods and services, addressing needs ranging from local communities to broader societal
challenges, and lower the threshold for civic participation in sectors such as sports, recreation
and culture, as well as in social and health services, education and training. While they largely
operate at local and national level, there are already associations that operate in several Member
States.
7
As an example, entities legally established in the form of an association can assume the legal status or
qualification of non-profit organizations (NPOs), public benefit organizations (PBOs), non-governmental
organizations (NGOs), civil society organizations (CSOs), third sector organizations (TSOs), charities, provided
they satisfy the legal requirements for such qualifications. Additionally, other legal statuses may be relevant when
discussing about associations (e.g. social enterprise and social economy organization).
8
Associations are regulated through legislation and rules specific to them in 24 out of 27
Member States (Annex 10 provides an overview of the legal regimes of associations in the
Member States).8
According to the legal comparative analysis conducted in the IA study underpinning the
preparation of the impact assessment, national regulatory frameworks are, in principle,
adequate for the development of associations operating at national level. At the same time,
rules on cross-border aspects of associations are generally not provided for in national
legislations or, when provided, they differ or they may be effectively constraining associations
operating in more than one Member State. This results in regulatory fragmentation legal
uncertainty about the applicable rules and unjustified administrative practices and costs for
associations, creating barriers for those associations engaged or wishing to engage in activities
in more than one Member State (Annex 11 summarises national rules on cross-border aspects
of associations).
Against this background, the initiative assessed in this impact assessment report (‘IA Study’)
focuses on non-profit associations as the predominant legal form in the non-profit sector and
aims create an enabling framework for cross-border activities of associations in the single
market.
1.1 Scope of the initiative
With the view to unlocking the potential of the non-profit sector in the EU, this initiative
captures “non-profit associations” having a legal personality and seeks to address barriers that
they face in their cross-border activities and mobility in the single market (as described in
Section 2). The entities in the scope of the initiative will be hereinafter referred as
“associations”.
As associations represent the predominant legal form among non-profit organisations at EU
level and through their membership-based structure, they have a direct leverage effect on
citizens who are members, donors or beneficiaries of their activities. Therefore, creating an
enabling framework for cross-border activities of associations has potentially a multiplying
positive impact on the largest part of the EU non-profit sector.
This said, cross-border obstacles faced by associations in the areas of taxation and labour law
will not be addressed by this initiative, taking into account the EU limited competence in these
areas and the principles of proportionality and subsidiarity (notably taxation aspects will be
tackled through specific factsheets on legislative frameworks and case-law, as explained in
Sections 1.2 and 2 and in Annexes 9 and 12).
8
With the exception of Ireland, Denmark and Sweden.
9
Other legal forms present in the non-profit sector and the social economy, such as foundations,9
cooperatives and mutual societies, are excluded from the scope of this initiative (as explained
in Annex 9).
Entities excluded from the scope of the initiative are outlined in Box 1.
Box 1: Non-profit sector and social economy entities and types of associations excluded from the scope of this
initiative and not assessed in this IA.
▪ Foundations, cooperatives and mutual societies (as explained in Annex 9)
▪ Political parties, due to their particular status within national and EU law10
▪ trade unions11
▪ Churches and other religious communities and philosophical or non-confessional
organisations (as referred to in Article 17.1 TFEU) due to their particular status within
national law which the Union is bound to respect
▪ The so-called “economic associations” present in a few Member States (i.e. Germany,
Denmark, Finland, and Sweden), due to their profit-making purpose12
1.2 Political context
The initiative is embedded in the broader political objectives of the European Green Deal and
the Digital Decade 2030.
More specifically, it addresses the political priority “An economy that works for people”13
,
contributing to the objective of “an economy that can fully respond to the needs of EU citizens
thereby ensuring social fairness and prosperity”. In this sense, the initiative interlinks with the
other measures announced in the Social Economy Action Plan and forms with them the Social
Economy framework as follows:
First, a proposal for a Council Recommendation on developing social economy framework
conditions in the Member States which will recommend Member States to integrate the social
economy into their socio-economic policies and create a favourable environment for the sector,
including through targeted public policies and adapted legal frameworks. Having as objective
9
When it comes to foundations in particular, it is important to note the following elements to exclude them from
the scope of the initiative (as further explained in Annex 9): important differences exist between foundations and
associations; one of the major problems that for example foundations face when operating cross-border is taxation-
related; a Commission proposal seeking to create a single European legal form for public benefit purpose
foundations (i.e. the European Foundation) was withdrawn in 2015 due to the lack of consensus among
MemberStates.
10
Regulation (EU, Euratom) No 1141/2014 on the statute and funding of European political parties and European
political foundations, under ongoing revision.
11
In line with Article 153 TFEU relevant to the right of association for representation and defence of the interests
of workers and employers.
12
IA study. They are not considered as associations in the strict sense, because they do not share the same (non-
profit) purpose and, therefore, fall within another category of private law organizations (such as cooperatives).
13
The European Commission priorities for 2019-24.
10
to foster access to the labour market and social inclusion, it will touch upon a variety of areas
of relevance to the social economy, such as employment policy, education, skills and training,
social services, green transition, territorial cohesion, data and research, access to funding,
access to markets, State aid, taxation, public procurement, and social impact measurement.
Despite the difference in scope, the proposal for a Council Recommendation is particularly
linked with the current initiative in that it is promoting an enabling environment for social
economy entities, including associations, but it does not touch upon cross-border activities of
associations specifically and its recommendations are non-binding for the Member States.
Therefore, there is no overlap between the two initiatives.
Second, two Commission Staff Working Documents (notably on “relevant taxation
frameworks for social economy entities” and on “non-discriminatory taxation of charitable
organisations and their donors: principles drawn from EU case-law,”) are planned to be
presented together with this initiative. They will provide factual information as to the state of
play of legislative frameworks in Member States and the case-law on taxation matters, thus
tackling cross-border taxation obstacles falling out of the scope of this initiative.14
The Social Economy Action Plan recognised that associations face constraints in operating
cross-border and referred to a forthcoming European Parliament initiative15
, which was
eventually adopted in February 2022. This European Parliament resolution aims to promote
associations and other non-profit organisations in the EU in completing the single market,
protecting their fundamental rights and fostering an EU democratic space. It asked the
Commission, under Article 225 TFEU, to submit two new legislative proposals: a Regulation
(under Article 352 TFEU), which creates the legal form of “European Associations”, and a
Directive harmonising common minimum standards for NPOs (under Article 114 TFEU).
Sharing the need to create an enabling environment for the non-profit sector, as stemming from
the EP resolution, and building on the objectives of the Social Economy Action Plan, the
Commission committed to pursue the matter. This initiative is, therefore, included in the
Commission work programme 2023, as part of the Social Economy framework, and is
complemented by the measures mentioned above. The Social Economy framework will address
the broader scope of issues raised in the European Parliament resolution, combining legislative
and non-legislative actions, in line with the principles of subsidiarity and proportionality
(details are provided in Annex 9).
Furthermore, this initiative may have links with the ‘Defence of Democracy package’ (see the
Call for Evidence of 16 February 2023), announced under the political priority of “A new push
for European democracy”.
14
SWD(2023) 211 on “Relevant taxation frameworks for social economy entities, which is based on available
analysis and input provided by Member States’ authorities and social economy stakeholders; and SWD(2023) 212
on “Non-discriminatory taxation of charitable organisations and their donors: principles drawn from EU case-
law,” which provides a description of this key principle as interpreted by the Court of Justice of the European
Union.
15
Social Economy Action Plan, page 5.
11
Addressing cross-border aspects of non-profit associations as civil society actors, this initiative
is also in line with the findings of the 2022 Annual report on the application of the EU
Charter of Fundamental Rights, which stresses that civil society organisations may advocate
policies and legislation beyond the borders of Member States and that their role is particularly
relevant in the context of current challenges the EU if facing.16
In this connection, the
Conference on the Future of Europe recognises the important role of the civil society and
mentions the need for a statute for European cross-border associations and non-profit
organisations.17
This initiative further underpins the political priority “a Europe fit for the digital age” by
seeking to facilitate the cross-border activities of associations and thereby enabling them to
play an active role in responding to the opportunities and challenges of the digital
transformation.18
This is relevant for strengthening freedoms of information and expression in
civil society (e.g. European Media Freedom Act), as well as for boosting civic engagement,
especially for youth, and volunteerism in general. In this regard, the European Solidarity Corps,
financing volunteering and solidary projects in the EU and partner countries aiming at
addressing unmet societal needs, constitutes a concrete illustration.
This initiative also supports the objectives of the EU Industrial Strategy and its update of
May 2021,19
and in particular the Proximity and Social Economy ecosystem, one of the 14
industrial ecosystems identified as critical for post-COVID recovery, for the resilience of the
EU economy and for the green and digital transition. In this context, the transition pathway for
Proximity and Social Economy presented in November 2022,20
mapped barriers and
opportunities and identified, in co-creation with stakeholders, 14 areas of shared action to fulfil
the potential for the green and digital transition of the actors in this ecosystem, including
associations.
Lastly, the initiative contributes to the Sustainable Development Goals (SDGs) and it
particularly supports the SDG 8 (Promote sustained, inclusive and sustainable economic
growth, full and productive employment and decent work for all), by supporting job creation
and improving equal and inclusive access to economic opportunities. It further addresses the
SDG 16 (Peace, justice and inclusive societies), by strengthening civil society through
protecting associations among other entities. This initiative also indirectly supports SDG 3
(Ensure healthy lives and promote well-being for all), by facilitating cross-border activities of
associations mainly active in sectors such as health, care and social services.
16
See Charter of Fundamental Rights of the European Union, OJ C 202, 7.6.2016, p. 389–405.
17
See Conference on the Future of Europe, Report on the final outcome, May 2022.
18
EESC, Exploratory opinion Presidency of 18.09.2020, Digitalisation and Sustainability – status quo and need
for action in civil society perspective
19
COM (2021) 350 of May 2021, Updating the 2020 New Industrial Strategy: Building a stronger Single Market
for Europe’s recovery.
20
SWD(2021) 982 of December 2021, Transition pathway on Proximity and Social Economy ecosystem.
12
1.3 Legal context
EU level
The right to freedom of assembly of association is a fundamental right enshrined in the EU
Charter of Fundamental Rights (Article 12).21
The Court of Justice of the European Union
(CJEU) has recognised it as one of the essential foundations of a democratic and pluralistic
society.22
In terms of the regulatory conditions for associations in the single market, there is no dedicated
EU-level legislation, such as there is for companies23
and cooperatives24
. The Commission
proposed creating a European legal form for associations, the European Association, in 1992,
based on the current Article 114 TFEU.25
The proposal was, however, criticised by some
Member States on grounds of subsidiarity and unsuitability of the legal basis compared to its
scope and purposes and because according to their view it did not answer to any proven need,
its provisions did not embody the diversity of national legislations and it laid excessive
administrative burden on associations.26
The European Parliament was supportive and
continued to ask for progress on the proposal until 2005 when it was eventually withdrawn by
the Commission due to lack of progress at the Council. Section 5 and Annex 9 provide further
information on the Commission proposal of 1992 and explain differences with the current
initiative, including the reasons why it failed and how the situation has evolved since then.
Furthermore, there are additional legal forms at EU level that aim to facilitate cross-border co-
operation and which do not exclude associations: in particular, the European Digital
Infrastructure Consortia (EDIC)27
, the European Research Infrastructure Consortium (ERIC)28
,
European Grouping of Economic Interest (EEIG),29
and European Territorial Cooperation
Grouping (EGTC)30
. As their names imply, these focus on cooperation of entities. As such,
their personal scope may partially cover associations with cross-border activities, to the extent
that these are eligible entities, but they do not address the specific challenges faced by
21
Article 12 of the Charter reads as follows “1. Everyone has the right to freedom of peaceful assembly and to
freedom of association at all levels, in particular in political, trade union and civic matters, which implies the
right of everyone to form and to join trade unions for the protection of his or her interests. 2. Political parties at
Union level contribute to expressing the political will of the citizens of the Union”.
22
Judgment of 18 June 2020, Commission v Hungary, C-78/18, EU:C:2020:476, quoting ECtHR, 17 February 2004,
Gorzelik and Others v. Poland, CE:ECHR:2004:0217JUD004415898, §§ 88, 90 and 92, and ECtHR, 8 October 2009,
Tebieti Mühafize Cemiyyeti and Israfilov v. Azerbaijan, CE:ECHR:2009:1008JUD003708303, §§ 52 and 53).
23
Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European company (SE).
24
Council Regulation (EC) No 1435/2003 of 22 July 2003 on the Statute for a European Cooperative Society
(SCE).
25
Proposal for a Council Regulation on the Statute for an European Association (91/273). It specified the rules of
the formation, registration, constitution, functioning, financing, dissolution, liquidation and insolvency of the
association.
26
For further details on the history of this file, see e.g. Tim Wöffen (2018), ‘European Associations: The Political
Debate and Basic Legal Questions’.
27
Decision 2022/2481 of 14 December 2022 establishing the Digital Decade Policy Programme.
28
Council Regulation 723/2009 of 25 June 2009 on the Community legal framework for a European Research
Infrastructure Consortium (ERIC).
29
Council Regulation 2137/85 of 25 July 1985 on the European Economic Interest Grouping (EEIG).
30
Regulation 1082/2006 of 5 July 2006 on a European grouping of territorial cooperation (EGTC).
13
associations wishing to extend operations in more than one Member State and that this initiative
targets. For a detailed overview of existing legal forms and how they relate to the entities and
the scope covered by this initiative, see Annex 9.
Regarding the cross-border activities of associations in the single market, CJEU case law has
confirmed that the right to establishment and the free movement of services apply to
“undertakings”, which are defined broadly as not limited to persons seeking to make a profit,
as long as activities are remunerated.31
Moreover, CJEU jurisprudence in EU competition law
establishes that NPOs - associations in this case - may be considered ‘undertakings’.32
A further
analysis of the specificities of associations and, broadly, the non-profit sector under EU law is
found in Section 3 of this IA. Associations benefit from the freedom of movement of capital in
the single market. Article 63 (1) TFEU states that all restrictions on movements of capital with
a cross-border dimension are prohibited. In this context, the term “movement of capital”33
is to
be understood in cross-border contexts as including, inter alia, inheritances and gifts, and
funding, as well as financial loans or credits, sureties or other guarantees, while the concept of
“restriction”34
is intended to cover any obstacle to the free movement of capital with a cross-
border dimension.
Member State level
Associations are subject to dedicated regulation in 24 Member States (in the majority of cases
separate laws, otherwise their regulation can be either found in the civil code or in a few
Member States they are regulated in one legal act together with foundations35
), with the
exception of Denmark, Ireland and Sweden. In general, these are comprehensive laws,
regulating associations in detail. Fundamental aspects and features of association regimes have
common points across the 27 Member States, including the possibility for associations to
undertake economic activities, although usually with varying limitations. This said, cross-
border aspects essential to mobility and activities of associations are not comprehensively
regulated in any Member State. Individual cross-border aspects are regulated to some extent
with different approaches, with eighteen Member States having some rules on different aspects
(see comparative table of national rules on cross-border aspects for associations in Annex 11).
Overall, from the perspective of an association active in more than one Member States, the
applicable legal rules and resulting administrative practices vary depending on where (i.e. the
specific Member State) it is domiciled and where (i.e. the specific Member State) it is active.
International level
31
CJEU C-179-14
32
See cases C-180/98 and C-184/98 and C-222/04 para. 125 and C-74/16, para. 41-50), as well as for example
Commission/Italy (C 119/06, EU:C:2007:729) para. 37-41 and CoNISMa (C 305/08, EU:C 2009:807) para.45.
33
Based on a settled case-law including C-318/07 paragraph 29 and C-235/17 paragraph 54.
34
Both between Member States and between Member States and third countries. See “Nomenclature of The
Capital Movements”, Annex 1 of Directive 88/361/EC, as well as cases C-105/12 and C-45/17.
35
One unique case is that of Belgium where there is the “Code of Companies and Associations” which regulates
different types of legal forms, including foundations, cooperatives and other European legal forms. As to the
Member States where associations are regulated in one legal act together with foundations, this is the case for:
Bulgaria, Cyprus, Latvia, Luxembourg and Romania.
14
The freedom of association is a human right, recognized by the Universal Declaration of
Human Rights (Article 20), the International Covenant on Civil and Political Rights (Article
22) of the United Nations and the European Convention on Human Rights (Article 11) of the
Council of Europe.36
The Council of Europe has adopted initiatives to facilitate within its membership the cross-
border operation of non-governmental organisations, including associations. These initiatives
emphasize a non-profit making objective, while the possibility to conduct economic activities
is present to support the said objective. The European Convention on the Recognition of the
Legal Personality of International Non-Governmental Organisations of 1986 includes elements
of mutual recognition and attempts to harmonise many aspects of association law: contracting
parties agree to recognise “as of right” the legal personality and capacity as acquired by the
contracting party where the organisation has its statutory offices. So far, only twelve Council
of Europe Member States (out of 46) have ratified the Convention, eight being EU Member
States.37
In addition, two non-legally binding initiatives are: the Recommendation on the legal
status of non-governmental organisations in Europe,38
suggesting minimum standards for non-
governmental organisations on a number of topics such as formation, legal personality,
governance, funding, and transparency, and the Fundamental Principles on the Status of Non-
governmental Organizations in Europe39
building on the above Recommendation.
1.4 Market Context
This Section provides the measure of the socio-economic value of associations in the EU and
thereby an indication of their untapped potential in terms of activities offered for citizens’
participation, services, goods and assets for the public benefit. First, this is done by analysing
the “socio-economic impact of associations in the EU” in terms of their presence at EU level,
their economic contribution to the EU Gross Domestic Product (GDP) and to the European
labour force; second, by focusing on the main cross-border activities that they perform across
Member States. The Section is complemented by Annex 6 which provides evidence on the
market context, looking at those associations operating cross-border and sectors where they are
most active.
Box 2: Treatment of data constrains on associations in the market context.
36
Article 11 ECHR reads as follows: “1. Everyone has the right to freedom of peaceful assembly and to freedom
of association with others, including the right to form and to join trade unions for the protection of his interests.
2. No restrictions shall be placed on the exercise of these rights other than such as are prescribed by law and are
necessary in a democratic society in the interests of national security or public safety, for the prevention of
disorder or crime, for the protection of health or morals or for the protection of the rights and freedoms of others.
This Article shall not prevent the imposition of lawful restrictions on the exercise of these rights by members of
the armed forces, of the police or of the administration of the State.”
37
CETS 124 - European Convention on the Recognition of the Legal Personality of International Non-
Governmental Organisations (coe.int), European Treaty Series - No. 124.
38
Council of Europe, Recommendation CM/Rec(2007)14 of the Committee of Ministers to member States on the
legal status of non-governmental organisations in Europe.
39
Fundamental Principles E (cartercenter.org).
15
The analysis in this Section of the IA is challenged by the minimal availability of recent, qualitative
and relevant data on associations at EU and Member State level.
Producing quantitative data on associations at EU level is difficult for the following reasons: (i)
absence of official statistics gathering data on associations (beyond registration) at Member State
and EU level, (ii) economic indicators are usually not collected in traditional business statistics at
Member State and EU level, with the exception of sectoral satellite accounts, ad-hoc research
projects or databases of private federations and sectoral actors, (iii) lack of harmonised definitions
and different traditions of the non-profit sector and different registration requirements in the Member
States (e.g. Orbis database does not allow to distinguish organisations that could be defined as
associations), and (iv) comparative studies at EU level are scarce and limited in economic indicators.
The IA (Section 1.4 and Annex 4) is informed by the two following existing studies, mostly using the
same input data (2014-2015): (i) a study from the European Economic and Social Committee on
recent evolutions in the social economy and (ii) a study performed for the UN on the size and scope
of the EU Third sector.
Basic data on the number of associations presented in this IA can be considered robust, as building
on available and recent official data for most Member States; and as half of the Member States have
recent data available in terms of associations employment and contribution to the GDP. However,
when it comes to other economic indicators such as size of the organisation, sectoral presence and
cross border activities, data on associations is often outdated or completely missing for most Member
States. Data in European databases such as Eurostat (e.g. Structural Business Statistics) or ORBIS
do not allow to disaggregate data on associations, e.g based on the legal form. In addition, there are
no recent comparative studies on associations at EU level. Sectoral data or specific data on social
economy, the third sector, NPOs, NGOs, CSOs, etc. are available and used where appropriate, but
they do not represent disaggregated data specific to associations.
Consequently, data about cross-border activities of associations is mostly absent (specific data on
internationalisation and cross-border activities of associations is available for only four Member
States (Germany, Austria, Italy and Estonia). Estimates in the IA regarding associations operating
cross- border are, therefore, based on theoretical assumptions, analogies and benchmarking (e.g.
parallels with similar sectors and activities), allowing extrapolations of input data available (Annex
4 provides for a detailed overview on how each estimate is calculated and for which data points
theoretical assumptions had to be made). It is important to note that these data points may present a
risk of overestimation. As mitigation measures, the analysis underpinning this IA builds on the lower
bound estimates and complements with qualitative information (based on literature review as well
as interviews and a targeted survey, as outlined in Annex 2) in order to further support the
quantitative methodology. More details on the methodology are provided in Annex 4.
To address the chronic data gaps on associations, and more broadly the social economy, the
Commission has undertaken actions such as: (i) contribution since 2017 to the joint work of ESTAT
and the OECD on the establishment of national satellite accounts for the social economy, also
covering associations. A few Member States (e.g. France, Poland, Portugal) have concluded or are
performing first pilots. Available data from these satellite accounts were used as input data in the
methodology of this IA; (ii) a study on the economic performance of the Proximity and Social
16
Economy industrial ecosystem (including associations) is launched in Q2 2023. Its first results will
feed the future monitoring of the initiative (see Section 9).
Based on the methodology of this IA, when it comes in particular to the impact of associations
at EU level, the analysis establishes and builds on an estimated number of 3.87 million
associations at EU level (see table 1).40
These data suggest that, while NPOs encompass other
types of organisations (as explained in Section 1), data for NPOs are likely to be mostly driven
by associations.
Table 1: Overall estimates of the number of NPOs and associations in the EU-27.
Lower bound Central estimate Upper bound
NPOs 4 500 000 4 600 000 4 700 000
Associations 3 800 000 3 870 000 4 000 000
Concerning their growth, the number of associations in the EU remained roughly stable in the
last years41
and they are most present in the social and health sectors, communication and
information (i.e. advocacy), culture, education, recreation (i.e. sports) and entertainment.42
Associations’ economic contribution to the EU GDP is estimated at EUR 420 billion (i.e.
2.9% of EU GDP)43. In terms of job creation, the IA study estimates that associations are
employing about 5% of the European labour force (8.8 million employees)44
, without
counting the non-paid jobs their volunteers represent. However, there is considerable variation
across Member States in the number of employees per association, as well as the share of all
employees that associations account for. For example, in Belgium, people employed by
associations accounted for about 11% of the total employees in 2022, and the average
employment per association is above the EU average. Contrary to this, in Croatia, on average
40
Figure considered as very robust. Official and recent data for number of associations is available for 26 MS (not
for IE). For DK, AT, LU, CY, BG, RO, no data for NPOs exist. For the missing data points estimates have been
developed using two different estimation techniques; for IE the weighted average share of associations among
NPOs across countries is used to estimate the number of associations. Where the total number of NPOs is not
available the average number of associations per capita for similar countries is used as a proxy value to estimate
the number of associations. For more details see Annex 4 (Section 2.1).
41
Considering growth in number of associations, only 8 Member States have data at hand. The weighted average
of the values yields an annual growth rate of 0.4%. However, recent data also suggests that the growth rate for
associations might slow down. For example, a recent report for Germany notes that it is likely that in the coming
years, the number of associations might actually decrease. Therefore, the IA uses a conservative 0 % growth
assumption.
42
Recent data on sectoral activity is available for 20 Member States, be it at most aggregated NACE code.
43
Figure considered as robust. Official and recent data for GDP contribution of NPOs is available for 22 Member
States. For the missing data points of EE, CY, EL, NL and IE estimates have been developed. The estimate for
GDP contribution of associations is deducted from the collected data for NPOs. For a detailed overview see Annex
4 (Section 2.2).
44
Figure considered as robust. Estimated based on recent sources for 16 Member States combined with an EU
comparative study: The Size and Composition of the European Third Sector, Lester M.Salamon and Wojciech
Sokolowski, 2018 (figures for associations and foundations. UK and Norway are excluded from the calculations).
These figures are also confirmed by the EESC study on Recent Evolutions of the Social Economy in the European
Union, 2016. For a detailed overview of the calculations, see Annex 4 (Section 2.3).
17
less than one person is employed per association, and the total number of people employed by
associations account for only 1% of employment overall. Besides paid staff, many associations
rely fully on volunteers to perform their activities.45
For example, data for France46
and
Austria47
suggest that the work delivered by volunteers amounts to an additional 580 000 and
230 000 Full Time Equivalent workers (FTEs)48
per year respectively.49
Annex 6 and Annex 4 offer more details and additional indicators on market context.
2. PROBLEM DEFINITION
Box 3: Treatment of data constrains on associations in the problem definition.
2.1 Preliminary remarks
Stakeholders’ views collected through the Public Consultation and further substantiated by a
targeted survey and interviews underpinning the IA study, identified a clear need for
associations to operate and perform activities in different Member States or having the potential
to do so, as follows:
Table 2: Stakeholders’ views on the need to operate and perform activities in other Member States.50
45
A recent Eurobarometer survey suggests that almost half of the population of the EU were engaged with civil
society organisations in one way or another in 2020 (on average 47% of respondents), including donating money,
engaging in volunteering, or taking part in activities civil society organisations offer. European Parliament (2018),
Civic Engagement, Flash Eurobarometer (FL4023) last accessed on 17/03/2023.
46
Institut national de la statistique et des études économiques (2018) Les associations actives en 2018. Last
accessed on 17/03/2023.
47
BÜNDNIS FÜR GEMEINNÜTZIGKEIT (2022), last accessed on 17/03/2023.
48
See glossary.
49
Data are available for the EU Third sector, shows that a total of 16 million FTE workers in the EU are volunteers
(EU-28, including UK). The Size and Composition of the European Third Sector, Lester M.Salamon and Wojciech
Sokolowski, 2018.
50
The data limitation disclaimer under Market Context applies.
The analysis in this Section of the IA is challenged by the limited availability of input data. Robust data
sets concerning the magnitude of the problem do not exist and this also links to the limitations described
in the Market Context above (Section 1.4). Moreover, the Public Consultation yielded a limited sample in
terms of absolute number of individual contributions, albeit relatively representative in terms of the nature
of respondents (including 13 umbrella associations representing the voice of around 1,958 associations)
As mitigation measures, the analysis of the nature and magnitude of the problem is complemented with
qualitative and quantitative information coming from a dedicated survey and interviews, desk research
and literature review and the use of anecdotal evidence and of case studies. Where assumptions need to
be made, this is duly indicated and relevant conclusions are nuanced. For more information on the
methodology, see Annex 4.
18
EC PUBLIC
CONSULTATION51
73% out of 64 respondents (among them, 29 out of 38 associations)
agree that associations need to be able to easily operate cross-
border in the single market in order to reach their objectives.
To note that, in total 13 out of those 38 associations are umbrella
organisations and thereby representing a reach of approximately 1,958
individual associations in the EU.
TARGETED SURVEY OF
THE IA STUDY 49% of responding associations (43 out of 88) have operations in
more than one EU Member State.
Out of the 50% of responding associations (45 out of 88) operating in
one single Member State, 19 % (8 out of 45) have considered
expanding their operations to another Member State.
For the purpose of understanding the scale of cross-border activities of associations, this IA
reflects the input of a total number of 3 026 associations (including individual associations and
umbrella organisations) throughout the overall consultation activities52
, either in cases where
an association directly contributed to a consultation activity, or indirectly, when the
contribution was made via the umbrella organisation the association is a member of. In total,
29 umbrella organisations representing the interests and needs of their members were reached
out during the consultation activities (more details in Annex 2, Table 1), thereby reinforcing
the representativeness of the collected evidence. The following Member States competent
authorities contributed to the consultation activities:
Estonia, Denmark and France53
(Public
Consultation54
); Belgium, Croatia, Italy, Denmark, Finland, Cyprus, France, Latvia (Targeted
Survey55
); and for the in-depth interviews: Belgium, Bulgaria, Cyprus, Denmark, Finland,
France, Germany, Latvia, Lithuania, Sweden.
51
Given the low number of respondents, any derived conclusion should be read with caution (‘re.
representativeness’).
52
These activities included a Call for Evidence (50 replies) and a Public Consultation (64 replies). Moreover, a
Targeted Survey (140 replies received out of which 88 are associations) and 64 in-depth interviews (replies from
41 associations) were carried out to further enhance the evidence base.
53
France authorities specifically provided a position paper during the Public Consultation.
54
To note that Member State authorities did not provide a contribution to the Call for Evidence.
55
Two different bodies provided information for Belgium, Finland and Denmark.
19
To further support the collected evidence base, the need to facilitate associations to engage in
activities and move across different Member States is further corroborated by recent
literature.56
2.2 What is the problem?
Based on the stakeholder input gathered from different sources – the Public Consultation, the
preparation of the IA study, the European Parliament Resolution and its supporting study, as
well as two recent independent studies commissioned by the European Commission57
the
following problem has been identified:
Figure 2: Problem statement.
The problem refers to both conducting cross-border activities and the possibility for cross-
border mobility for associations across the Union, as described below.
Associations concerned by the identified problem
To identify current associations with cross-border activities58
, there is no direct data
available for most EU Member States. An estimate was developed based on reliable data for
Austria and Germany, assuming that 8% of EU associations perform cross-border operations:
310 000 cross-border associations in the EU.59
These associations appear to be organised in
several Member States. They are active at the EU or international level in areas such as
56
See e.g. Breen, O. B. (2018). ‘Enlarging the space for European philanthropy’, European Foundation Centre
(EFC) and Donors and Foundations Network of Europe (DAME); Charrad, Kristina (2014), ‘Why Is There No
Statute for a European Association?’, M. Freise, T. Hallmann (eds.), Modernizing Democracy, DOI 10.1007/978-
1-4939-0485- 3_16, Berlin and New York: Springer Science+Business Media.; and Simon Loubris (2003)
‘European Association Status: the neglect of Europe’s associations’.
57
European Commission, Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs,
Comparative legal analysis of associations laws and regimes in the EU: final report (hereinafter “Comparative
legal analysis of associations laws and regimes in the EU: final report”), Publications Office of the European
Union, 2022; Directorate-General for Internal Market, Industry; Entrepreneurship and SMEs, Study on promoting
cross-border activities for social economy (to be published by 2023).
58
For instance, when associations provide goods and services beyond their de jure or de facto Member State of
establishment, when their members come from different Member States, as well as when they collect assets,
notably in the form of donations. The data scarcity also translates into an absent single definition of a ‘cross border
activity’ that can be applied to the available data and research used and developed in Annex 4. Consequently, a
relatively broad definition is applied when it comes to data gathering for associations with cross border activities
(based on the studies available for Austria and Germany).
59
IA study. Estimates are based on data available for Austria and Germany. Data for Estonia and Italy were also
available, however not reliable nor representative and were therefore excluded from the estimation exercise. This
figure also includes 4 996 so called International NPOs associations, which are established across the EU countries
in 2020 (UIA, 2021). Their number has increased about 30 % since 2010 (about 100 INPOs per year). For a
detailed overview see Annex 4 (Section 2.5).
ASSOCIATIONS THAT WANT TO OPERATE ACROSS BORDERS IN THE SINGLE
MARKET ARE FACED WITH UNCERTAINTY ABOUT APPLICABLE RULES AND
ADDITIONALADMINISTRATIVE BURDEN AND COSTS
20
healthcare and social services, social inclusion, sports, humanitarian aid, as well as in cross-
border innovation and research projects. It is important to note that these figures are best
estimates and, therefore, present a risk of overestimation, as extrapolations had to be made, as
explained in Annex 4, Section 2.5.
Table 3: Estimated total number of associations and number of cross-border associations at EU level.
Estimate Total number of associations Number of cross-border associations
Cross-Border Share: 8%
Lower bound 3 800 000 304 000
Central estimate 3 870 000 310 000
Upper bound 4 000 000 320 000
The consequent contribution of cross-border associations to EU GDP is estimated between
EUR 5.7 billion and EUR 7.0 billion (see table below).60
These estimates should be treated
with cautiousness, as there might be a risk of overestimation due to limited official data.
Table 4: Estimated contribution of cross-border associations to the EU GDP (2021).
Lower bound estimate Upper bound estimate
EUR 5.7 billion EUR 7.0 billion
0.04% of total GDP (2021) 0.05% of total GDP (2021)
Among cross-border associations, there are associations active in border regions. The IA study
survey showed that 70% (30 out of 43 replies) of the associations acting cross-border had
activities in at least one border region.61
In addition, qualitative and quantitative information,
building on the participation of civil society organisations, including associations, to
implement Interreg programmes,62
supports that associations active in border regions are (or
desire) undertaking cross-border activities in neighbouring Member States (see box 2).
Box 4: Associations present in Interreg Cross-Border Programmes.
Data from keep.eu database63
for the programme period 2014-2020 provide a good picture about associations
involved in different Interreg programmes, thereby indirectly showing that associations have clear incentives
60
IA study. Estimates based on the combination of data on the share of FTE working cross-border with the
estimated contribution of associations to GDP. As the estimates for cross-border employment are likely to
underestimate the true cross-border activities considerably, the upper bound estimate should be seen as more
reliable. For more info see Annex 4 (Section 2.7).
61
IA study. However, due to the limited sample, the study information is insufficient to achieve proper estimations
on the total number of associations active in border regions.
62
For example, http://www.at-cz.eu/
63
The Keep.eu database contains data for 9 079 Interreg projects (out of the 9 485 or 96%). It serves all
professional audiences in need of aggregated data regarding projects and beneficiaries of European Union cross-
border, transnational and interregional cooperation programmes among the member States, and between member
States and neighbouring or pre-accession countries.
21
to operate cross-border, including cross-border activities in neighbouring regions. A minimum 1 335 or 15%
of all projects had associations as a partner or consortium leader.64
Looking at projects in NUTS III regions
from at least two different Member States directly on the borders or adjacent to them (neighbouring regions),
associations were engaged in 536 or 6% of the overall projects. Main areas of cross-border, transnational and
interregional cooperation involving associations: tourism (10%), cultural heritage and arts (8%), SME and
entrepreneurship (6%), sustainable management of natural resources (4%), education and training (4%), social
inclusion and equal opportunities (4%), clustering and economic cooperation (4%).
A second group to be considered as concerned by the identified problem are associations that
are not yet active in more than one Member State, but which would potentially expand cross-
border, if barriers to be specified below were removed. These are associations active
domestically with an interest to go cross-border. Arguably, estimating the size of this group of
associations is the most challenging, as no clear-cut information is available. Several estimation
techniques (based on company data and surveys)65
were used to arrive at a “theoretical
maximum potential” of 350 000 associations that could be engaged in cross-border activities,
should identified barriers be removed. This corresponds to 9% of the total number of
associations66
in the EU. This is the most conservative approach (e.g. compared to the
stakeholder survey showing 17%). This corresponds to a theoretic maximum ‘opportunity cost’
of EUR 7.9 billion (annual contribution to EU GDP) and 140 000 jobs (FTEs working cross-
border)67
. This estimate is the most conservative result that could be used amongst applied
methods.
Furthermore, as it is not realistic to assume that any policy option assessed in the IA could
solve all identified barriers (as some of them are outside the scope of intervention such as those
relating to taxation or labour), the IA study estimated68
that at maximum 185 000 associations
could be expected to consider operating cross-border in the event of sufficient policy
64
This is most likely an underestimation as selection could only be based on projects in English, German and
French. Projects registers in another language are not selected. These figures are at project level, where at least 1
association is engaged as a (lead) partner. This means that actual participation of associations will be a multitude
to the figures above. From the program period 2021-2027 onwards such figures will also become available at
partner level.
65
In order to estimate the maximum theoretic potential of associations willing to go cross-border, various sources
were employed, including Eurobarometer and Eurochambers surveys which explored the interest to go cross-
border for companies not yet active. A further breakdown by size of organisations was used. Data on micro-
enterprises were used as proxy for associations, as associations can be conceptualised to be most similar to micro-
enterprises, given their resources available and number of employees. See Annex 4 (Section 3.2) for detailed steps
and sources.
66
This figure of 350 000 associations (or 9% of the total number of associations) was triangulated with information
collected via the stakeholder survey specifically targeted to associations, which showed a slightly higher share of
associations willing to go cross-border (~17%). In terms of size, over 90% of associations responding to the survey
were small or micro-organisations, reflecting the typical (micro) structure of associations. However, due to the
topic of the survey and the stakeholders reached out to, a certain selection bias is likely towards respondents from
organisations that are interested in the topic of cross-borders activities, leading to a slightly overestimated figure.
For this reason the more conservative estimate of 9% was used. For more details see Annex 4 (Section 3.2).
67
Deducted from data on employment and GDP contribution of associations already operating cross- border. For
more detail, see Annex 4 (Section 3.2).
68
Based on a benchmark of small and medium sized enterprises in services sectors increasing their cross-border
trade over a 15-year timeframe.
22
intervention.69
A further element to mitigate the risk of a potential overestimation builds on the
fact that, as compared to SMEs in the service sector, associations (i) have more limited
operational and financial capacity (ii) are mostly small to micro-organisations and (iii) are
much rooted to the territory with missions and business models addressing local markets.
Based on the above qualitative arguments, the table below shows three lower growth scenarios
for associations expected to consider operating cross-border in the event of sufficient policy
intervention.
Table 5: Different scenarios of associations that could realistically consider operating cross-border in the event
of sufficient policy intervention (as a share (%) of “current cross border associations” of 310 000 associations).
Scenario 1: Benchmark (60%) 185 000 SCENARIO A
Scenario 2: -5p.p. (55%) 170 500
Scenario 3: -10p.p. (50%) 155 000 SCENARIO B
Scenario 4: -15p.p. (45%) 139 500
N.B.: to note that only scenarios 1 and 3 will be further used to measure the impacts (IA, Section 6). As
scenario 2, 3 and 4 are more conservative scenarios proportionate to the benchmark scenario, only one
lower scenario will be further used in the assessment of impacts. For clarity purposes, scenario 1 and
3 will be referred to thereafter as ‘scenario A’ and ‘scenario B’, respectively.
Table 6: Summary of best estimates for associations operating and potentially operating cross border.
Total number of associations
(EU)
3 870 000 % of total IA Impact Section 6
Associations currently
engaged in cross-border
activities
310 000 8% Basis for impact
calculations for
“recurrent costs”
Associations that could
potentially operate cross-
border (theoretical maximum)
350 000 9%
Associations that could
potentially operate cross-
border (maximum unlocked
in case of policy intervention)
185 000 (scenario A)
155 000 (scenario B)
5%
4%
Both scenarios are used
as a basis for impact
calculations for “one-off
costs” and potential
benefits
69
Estimate based on developments for SMEs in the service sector. The “30 years of Single Market” report was
used as the most suitable benchmark. The report estimated that companies’ trade in services within the Single
Market increased from 5% to 8% (as a share of the GDP) within 2004-2019 in the EU, representing an increase
of 60% of trade in services within the Single Market. The same 60% increase is applied to the number of
associations estimated to be already active cross-border (310 000). See Annex 4 (Section 2.5).
23
When considering the sectors and size of associations active or willing to operate across-
borders, the IA study highlights that no clear evidence exists at hand. In terms of sectoral
activity, assumptions can be made that associations operating in sectors with comparable
internationalisation degree in the for-profit sector might be more likely to pursue cross-border
ambitions, despite of associations generally being rooted to the territory and with potentially
fewer international ambitions. In terms of size, the IA study offers arguments supporting the
assumption that bigger and more professionalised associations are more likely to operate across
border than small ones, as they have more capacity, resources, scaling potential and are more
likely to operate in international context driven by trade or knowledge sharing. The deterring
effect of costs to operate cross-border is likely to be bigger for smaller associations with little
or no paid employees that need to spend additional time to gather information, establish the
cross-border activities and comply with any potential legal requirements if no policy
intervention occurs. Furthermore, according to interviews during the scoping phase
underpinning the IA study, the need to carry out cross-border activities mostly concerns: (i)
fields which tend to cover a cross-border dimension (e.g. education, culture, health,
environmental and fundamental rights) and (ii) associations with presence in many Member
States (as an indication, around 5 000 International NPOs70
exist in the EU. Their number has
increased by about 30 % since 2010).
Description of the identified problem
As emerged from the Public Consultation, the survey conducted for the IA study and further
corroborated by anecdotal evidence, associations face a fragmented landscape of diverse rules
or the lack of enabling rules in the Member States applying to their cross-border activities,
mobility, and cross-border internal organisation elements (i.e. membership or governance
functions).71
This fragmentation creates an uneven playing field for associations preventing
them from enjoying their freedoms in the single market and resulting in regulatory and
administrative barriers and unnecessary excessive costs.72
This is further confirmed by the legal
analysis conducted.
Based on the comparative analysis of laws in the Member States, as conducted in the IA study
and building on a recent comparative legal analysis of associations laws and regimes in the
EU,73
it appears that, while the legal framework in the Member States is, in principle, adequate
70
The Union of International Associations defines NPOs that are set up in more than one Member State with
objectives and activities framed in a European or wider context as International NPOs (or INPOs).
71
IA study: 36% (16 out of 45) of the surveyed associations active cross-border, indicated to have encountered
difficulties with establishing, registering, and/or continues running of operations cross-border. Public
Consultation: “an association registered in an EU Member State currently faces restrictions when seeking to
operate in another EU Member State”, more than half of the respondents (58% - 37 out of 64) strongly agreed
with the statement.
72
The importance of costs was raised by 31% (9 out of 33) of the interviewed associations conducted for the IA
study. The nature of those costs can significantly vary, ranging from legal establishment costs to legal consulting
services for instance. An association that tried to expand to other Member States, but eventually did not, stated
that the costs of starting activities in a new Member State would have cost them EUR 30 000. Small associations,
as pointed out by one of the interviewed stakeholders, are not able to cope with such expenses. Even if their
cashflow is consequent due to their funding model, they do not have the sufficient reserves to disburse important
sums and therefore chose not to expand.
73
Comparative legal analysis of associations laws and regimes in the EU: final report
24
for the development of associations in a domestic context, barriers in the single market exist in
four areas: 1) the cross-border activities of associations in relation to their right to
establishment, thereby hampering associations’ capabilities to provide services and goods in
the single market; 2) the movement of capital in the single market; 3) the possibilities for cross-
border membership and participation in governance bodies; and 4) associations’ possibilities
for cross-border mobility.
As it will be described in more detail under the respective problem drivers below, barriers
consist of de jure or de facto uncertainties, restrictions or requirements resulting in burdensome
administrative processes and costs, in particular, regarding the recognition of the legal
personality, registration formalities, secondary establishment, cross-border mobility, cross-
border donations, membership and governance. Overall, it is rare that a specific restriction is
present across all Member States. On the contrary, in many cases, only a few Member States
retain a certain type of restriction, as is explained in Annex 11.
The above-mentioned barriers are distinct to associations and have been invoked by
interviewed associations74
as one of the causes of their reduced cross-border capacity, including
to be active in the single market as providers of services and goods. Other barriers are in line
with generic barriers in the single market, such as difficulties in obtaining information on the
relevant regulatory requirements, problems related to registration of economic activities in
another Member State, and burdensome procedures due to differences in tax systems and
administrations.75
Furthermore, associations present in services sectors face general barriers,
as do entities established in other legal forms, including those related to requirements of having
a specific legal form, as indicated by reports published by the European Commission.76
Main barriers encountered by associations operating across borders (as identified in the IA
study) are:
74
IA study. For example, 33 associations participated in the interview. The most prominent problem they raised
was the different set of national rules for establishing the legal personality of associations (14 associations),
followed by the different set of rules defining the associations themselves in the various Member States. For more
details see Annex 2.
75
COM/2020/93. Commission Communication on Identifying and addressing barriers to the Single Market of
10.03.2020.
76
European Commission, Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs,
Mapping and assessment of legal and administrative barriers in the services sector: summary report, Publications
Office, 2021.
25
Figure 3: Barriers encountered by associations operating cross- border.
To note that some of the identified barriers, such as obtaining recognition of tax-benefits (e.g.
value added tax [VAT], income tax and tax breaks linked with charitable donations) and
administrative procedures and controls when opening or closing bank accounts will not be
addressed by the current initiative, taking into account the limited EU competencies in the area
of taxation, as well as the overall single market focus of the initiative. To note that a common
denominator in many Member States77
is the so-called public benefit status, which often
unlocks access to both of the said aspects.78
There are significant challenges in having this
status recognized in cross-border contexts, despite CJEU case law establishing a principle of
non-discrimination (details are found in Annex 12). This said, these aspects will be covered by
the Commission Staff Working Documents on the state of play of taxation frameworks in
Member States and on non-discriminatory taxation of charitable organisations and their donors,
as explained in section 1.2 and elaborated further in Annex 9. Furthermore, regarding VAT, as
of 2025, associations engaging in economic activities that qualify as SMEs can benefit from
the new simplification rules which will open the VAT exemption to small businesses
established in other Member States and help reduce VAT compliance costs,79
thereby also
positively affecting the situation for associations operating cross-border. When pertaining to
the EU anti-money-laundering and counter-terrorism legislation, the stakeholder consultation
of this IA has raised problems associations face when opening bank accounts and accessing
other financial services.80
These will also not be covered under this initiative.
The identified barriers, as developed under the problem drivers below, illustrate the range and
scale of the problems faced by associations in the single market. This situation hampers
associations currently active across borders in the Union (310 000 already active across
borders) or discourages associations wishing to go cross-border (350 000 estimated as
theoretical maximum potential number to expand their activities cross border, yet the IA takes
77
(Austria, Bulgaria, Germany, Spain, France, Croatia, Hungary, Ireland, Luxembourg, Romania), see
Comparative legal analysis of associations laws and regimes in the EU: final report.
78
Indirectly, via fiscal facilities tax-privileged status for private donors (e.g., Estonia, Spain, Hungary, Romania,
Sweden, Slovenia) or recipient associations (Austria, Germany, Bulgaria, Denmark, Estonia, Spain, Finland);
and/or directly preferential access to public funds and use of public assets (e.g., Bulgaria, Hungary, Romania).
79
VAT scheme for Small Businesses (europa.eu).
80
Associations raised these points during the in- depth interviews regarding compliance complexity related to
banks as one of the main difficulties associations face when acting in a single Member State (6 out of 15). For
more details see Annex 2.
26
185 000 as a more realistic proxy to base the analysis) to benefit from the freedoms granted by
the single market and reach their full potential as economic and civic actors.
2.3 What are the problem drivers?
The relationship between the problem itself, its drivers, as well as its consequences is set out
below in the problem tree table, Figure 4.
Figure 4: Tree table of the problem definition.
2.3.1 Driver 1: Key cross-border aspects for associations are either
unregulated or regulated in varying ways in each EU Member State
The differences in legislation across Member States concerning the recognition of their legal
personality and related formalities, economic activities (provision of services and goods),
cross-border mobility, cross-border capital transfers and internal organisation elements of
associations create legal uncertainty and burden cross-border associations in several ways,
including through additional costs or effort in order to find basic information about applicable
rules on regulatory requirements and administrative procedures in the Member State(s) in
which an associations seeks to operate.81
More specifically, when asked in the context of Public Consultation about the most important
needs for associations that operate or want to operate in more than one Member State, about
one fourth (i.e. 24% - 48 out of 64) of respondents indicated the provision of services in another
Member State without registration as most important. In this context, it is worth noting that
81
IA study: 36% (i.e. 16 out of 45) of the surveyed associations active across borders indicated to have
encountered difficulties with establishing, registering, and/or conducting activities cross-border. Results from the
Public Consultation show, among the identified causes of restrictions that associations face when operating across
borders, the following ones: associations’ lack of knowledge/understanding of legislation in other Member States
(53% - 34 out of 64), lack of administrative procedures taking into account cross-border activities of associations
(52% - 33 out of 64), incompatible legislation between Member States (50% - 32 out of 64).
27
challenges SMEs are facing when it comes to understanding regulatory requirements82
also
apply to associations engaging in economic activities and concurrently falling within the
definition of SMEs.83
Among the needs based on the replies to the Public Consultation, were
also cross-border mergers (i.e. 39% 25 out of 64 respondents) and conversions (i.e. 40% 26 out
of 64 respondents).84
According to the comparative analysis of national laws and as outlined earlier in Section 2,
while there is a number of common traits when it comes to association laws at Member State
level (illustrated in Annex 10), significant differences exist. Furthermore, most national
legislations do not attempt to facilitate cross-border issues, which is the targeted focus of this
initiative.
As said above, regulatory and administrative barriers concerning this driver and affecting cross-
border associations exist in four particular areas: 1) related to the right to establishment and
thereby hampering associations’ capabilities of the provision of services and goods; 2) related
to the movement of capital (i.e. donations, membership fees), 3) related to the possibilities for
cross-border membership and participation in governance bodies, and 4) related to their
possibilities for cross-border mobility.
Regarding establishment, a key challenge is the variation in the Member States of the
recognition of a non-domestic association’s legal personality. While no mechanism exists at
EU level, practices vary from automatic recognition to no recognition, requiring expanding
associations to set up a new legal entity or branch in the other Member State. This point will
be elaborated separately under Driver 2 below.
Concerning cross-border mobility, key aspects are largely unregulated, including cross-border
conversions, mergers and divisions.85
This causes legal uncertainty for interested associations.
Moreover, a few Member States explicitly impose restrictions, such as excluding the possibility
for an association to transfer its registered office abroad, without going through a process of
liquidation.86
Concerning movement of capital (i.e. donations, including gifts, and inheritances), which is a
crucial foundation of the existence of many associations87
, they face varying requirements such
82
COM/2020/93. Commission Communication on Identifying and addressing barriers to the Single Market of
10.03.2020.
83
Based on the definition of an SME in the Commission Recommendation of 6 May 2003 concerning the
definition of micro, small and medium-sized enterprises (Text with EEA relevance) (notified under document
number C(2003) 1422): “…an enterprise should be considered to be any entity, regardless of its legal form,
engaged in economic activities, including in particular entities engaged in a craft activity and other activities on
an individual or family basis, partnerships or associations regularly engaged in economic activities.”
85
Results from the Public Consultation show that 28% (i.e., 18 out of 64) reported differences between Member
States of liability, liquidation and dissolution regimes as one of the most significant restrictions faced associations
when engaging in activities across borders.
86
Austria and Germany.
87
For the purposes of this IA, donations are the most relevant cross-border capital transfer, including gifts and
inheritances. See e.g. C‑78/18.
28
as transparency duties,88
additional duties of care89
or even State approval90
which, although
applied also for domestic associations, especially affect foreign associations,91
thereby
restricting the free movement of capital relied upon by associations. 92
This links also to Driver
3. According to the in-depth interviews conducted with associations, 22% (4 out of 18) reported
difficulties in receiving donations from other countries.
Box 5: Example of restrictions for an association to receive donations.93
Furthermore, legal restrictions that associations face exist in relation to their cross-border
governance and membership. In Poland, non-nationals cannot establish an association, but can
join it only after it is established. In Finland, the chairperson of the executive committee of an
association must be resident in the country. These issues are further specified in Annex 11.
Further, results from the Public Consultation show that 23% (15 out of 64) of the respondents
identified differences between Member States in membership requirements as one of the
restrictions when associations engage in activities across borders. Further challenges arise from
the differences and legal limitations in possibilities to use modern technology in the governance
of associations, such as arranging meetings of the general assemblies virtually.94
2.3.2 Driver 2: Lack of mutual recognition of legal personality of an
association when operating cross-border
When asked what they considered to be the causes of the restrictions that associations face
when operating across borders in the single market, 58% (i.e. 37 out of 64 respondents) of the
respondents to the Public Consultation identified the lack of recognition of an association’s
legal personality in other Member States. There is a general absence of rules at EU level and
at Member State level allowing for automatic recognition of an association’s legal personality
in the EU, which creates uncertainty and fragmentation. For cross-border associations, this
results in either mandatory legal requirements for establishing a new legal entity or a branch,
88
This is the case for Cyprus and Greece, for more details see Annex 11.
89
This is the case for Germany, for more details see Annex 11.
90
This is the case for Luxembourg and Belgium, for more details see Annex 11.
91
In this respect, it should be recalled that also national measures which apply equally to domestic and imported
goods could inhibit the free movement of goods based on the differences between the national rules of the Member
States, see case C-120/78.
92
IA study. In some MSs there are some restrictions to donations from abroad, e.g. in Cyprus the source of any
revenue shall be known and lawful, in Greece there is an obligation for associations to disclose donations above
a certain amount, in Belgium and Luxemburg the state approval is required for donations above a certain threshold,
and finally in Germany donations may trigger additional duties of care for banks and accountants. See Annex 11
for more details.
93
IA study.
94
IA Study.
Example: In Belgium, associations need State approval for donations from individuals exceeding
EUR 100 000, which is a restriction on an association’s possibility to receive capital and on foreign
donors to donate across borders in the EU.
Source : Arrêté ministériel du 14 avril 2005 exécutant les articles 16, 33 et 54 de la loi du 27 juin
1921 sur les associations sans but lucratif, les associations internationales sans but lucratif et les
fondations.
[Source: IA studyIA study.]
29
as is the case in a few Member States95
or legal requirements for registration in a public register,
only after which the association’s legal personality is recognized, which is the case in another
few96
The main exception to this concerns eight EU Member States that have ratified the Council of
Europe Convention on the Recognition of the Legal Personality of International Non-
Governmental Organisations (see also Section 1.3), given that these Member States have
agreed to mutually recognise “as of right” the legal personality and capacity of associations
meeting the criteria set in the Convention (such as non-profit aim of international utility, and
activities in at least two Member States), as acquired by the Member State where the
organisation has its statutory offices. To benefit, associations would need to operate between
these Member States which have ratified the Convention, which leaves the single market
fragmented.
Box 6: Example of an association facing various challenges in border regions.97
Box 7: Example of burden resulting from absence of recognition of an association’s legal personality.
95
e.g. Greece, Slovakia, and Spain.
96
e.g. Croatia, Cyprus, Romania.
97
See also Annex 8 on challenges faced by associations present in border regions.
A pan-European association active in the democracy and fundamental rights sector needed a full year to be
registered in one Member State, while the same process lasted on average 3 months in another Member State.
This was due to the absence of recognition of the legal personality and the lack of knowledge of the local
administration about legislation in another Member State which was different.
[Source: IA study]
Example: Establishment of a single cross-border entrance for the European Archaeological Park at
Bliesbruck-Reinheim
The aim was to create a European Archaeological Park between the region of Bliesbruck in France and
Reinheim in Germany, including a single cross-border point of entry, using the legal form of an association.
The different legal frameworks in France and Germany make it difficult to choose the best possible legal
structure. The establishment of a joint entrance involves various legal matters to be addressed and various
potential barriers were identified.
Full recognition in a Member State of the legal personality of an association established in another Member
State and equal treatment with the associations of the respective Member State could arguably reduce these
challenges.
[Source: b-solutions: solving border obstacles – a compendium 2020-2021, Case study: Establishment of a
single cross-border entrance for the European Archaeological Park at Bliesbruck-Reinheim, p. 59-61.]
30
2.3.3. Driver 3: Excessive administrative practices and processes when
operating cross-border
In the Public Consultation, when asked about the most often mentioned types of restriction
faced by associations when engaging in economic activities across borders, more than half (i.e.
52% - 33 out of 64) of respondents referred to: administrative formalities to implement actions
in another Member State without prior registration and registration procedures in another
Member State (cost, case handling time, uncertainty about constitutive elements etc.). The
replies from the Public Consultation refer to registration requirements as a condition for being
able to operate in another Member State, in some cases for the purpose of achieving recognition
for their legal personality (as also described in Driver 2 above). In addition, close to half (i.e.
47% - 30 out of 64) of respondents reported as barrier registration requirements in relation to
VAT when conducting activities abroad.
Another example concerns the transfer of seat, which is restricted in some Member States,98
requiring an arduous process of dissolution. This is supported by evidence from the Public
Consultation, where 40% of the respondents (26 out of 64) identified ‘transfer of seat’ as one
of the most important needs for associations operating or willing to operate in more than one
Member State.
This leads to the understanding that administrative practices and processes are a barrier in
cross-border contexts. To be precise, it is not the case only for associations. When identifying
existing barriers in the single market, several surveys consistently quote complex
administrative procedures as being one of the most serious obstacles in the single market,
particularly for SMEs.99
The scale is however magnified for associations when taking into
account their limited operational and financial capacity and their non-profit character, as well
as in comparison with those of other actors in the single market.100
For example, the
requirement to set up a distinct legal entity or a branch regardless of the nature of operations in
question or the obligation to seek approval for or register cross-border capital transfers in
certain Member States, as described under Driver 1. In the Belgian example below the process
for seeking approval for receiving a donation from abroad may take up to three months.
99
European Commission: Identifying and addressing barriers to the Single Market. COM (2020)93.
99
European Commission: Identifying and addressing barriers to the Single Market. COM (2020)93.
100
IA study.
31
Box 8: Examples of excessive administrative practice.
Finally, the burden emanating from administrative formalities, for instance from the effort
needed to organise and collect documents and arrange for translations, is linked to an
insufficient degree of administrative cooperation between authorities of the Member States. In-
depth interviews in connection with the IA Study highlighted that language capacity is
observed as a barrier for both associations’ staff and administration employees. Formal
documents usually need to be submitted in the official language of the relevant Member
State.101
In part, this burden could be alleviated by improving the access to information and
administrative cooperation, by leveraging digitalisation and digital tools.
2.4 How likely is the problem to persist?
Without any policy intervention, the identified barriers associations are facing in the single
market are likely to persist. These barriers are of legal or administrative nature resulting from
the application of law, hence it cannot be expected that non-binding initiatives, such as those
announced in the Social Economy Action Plan or the mentioned initiatives of the Council of
Europe (as outlined in Section 1), can resolve them fully or to a meaningful extent.
There is no indication of Member States planning legislation in this space and there is currently
a general lack of legislative measures in Member States addressing specifically the cross-
border activities and mobility of associations. Only one Member State (Belgium) has a
dedicated legal form concerning international activities and only three Member States
(Bulgaria, Croatia and Cyprus) regulate individual elements, such as explicitly mentioning the
possibility to establish a branch in another country. Overall, Member State-level measures are
of limited benefit, in the absence of a simple way to obtain recognition of the legal personality
of associations, facilitating mobility as well as the free movement of capital, and the provision
of goods and services cross-border. Moreover, as already indicated, a cross-border conversion
requires dissolution of the association and liquidation of its assets in two Member States.
(These cases are described in Annex 11).
101
IA Study
An association active in the democracy and fundamental rights sector pointed at particular requirements of
the registration process in Belgium: an association is required to have a physical address in Belgium to register
(and ultimately to operate in Belgium).
[Source: IA study.]
The notary procedure is a regular obstacle for pan-European boards and slows down communications with
association registers. For example, it is not possible to use German notarial servicesfrom Belgium or to submit
documents via the diplomatic representation as an alternative. A mixed-national board must therefore appear
in person at a notary's office in Germany "in a number authorised to represent" (in vertretungsberechtigter
Zahl) in order to submit amendments to the articles of association to the German registry court.
[Source: Call for Evidence.]
32
Furthermore, the magnitude of the social and economic consequences is expected to grow for
the following reasons:
• Bearing in mind data limitations, there appears to be an increasing need for associations to
operate cross-border – involving not only recurring activities, but also cross-border
restructuring and mobility – based on the results from the Public Consultation, where 45%
of the respondents strongly agree that associations are likely to increase cross-border
activities in the EU single market in the future and that these organisations might be
inclined to enhance their activities further if barriers were removed.102
• The nature and scale of successive crises (pandemic, the Russian aggression on Ukraine,
high energy prices, disrupted supply chains), current challenges (fight against climate
change, digital divide, migration, aging demographics, disinformation) and a “Just
Transition leaving no one behind” require mobilisation of all actors, including the non-
profit sector. These challenges call for long-term action across Member States, especially
in sectors in which the presence of associations is strong such as health, fundamental rights,
humanitarian aid, communication and advocacy, education, culture.103
• The civic space is reported to be shrinking in parts of the Union, and pressure on civil
society organisations, associations included, from state authorities and non-state actors is
increasing.104
Overall civil society organisations report a range of challenges, obstacles and
restrictions in certain Member States that have limited their ability to carry out their
activities, thereby hampering associations capacity to fulfil their purposes and restrict their
fundamental rights and those of their members.105
• While the IA study generally suggests that the developments in the number of associations
have been dynamic across Member States between 2011 and 2017,106
the growth trend
seems to slow down in recent years. As suggested in the IA study, although year-on-year
changes in their numbers are relatively small, associations seem to remain an important
social and economic driver. However, when it comes to International NPOs, there is a
growth trend (30% increase in 10 years time). This trend confirms the growing interest of
associations to operate across borders, and more precisely in a pan European context.107
102
19% respondents somewhat agreed (12 out of 64), 11% indicated neutral (seven out of 64), 8% somewhat
disagreed (five out of 64), 9% strongly disagreed (six out of 64) and 8% indicated no opinion or did not know
(five out of 64).
103
Examples, most of which are cross-border, in the context of the UA war have been included in the 2022 Charter
report 1_1_201131_2022_charter_report_en.pdf (europa.eu), p. 4.
104
EUROPE’S CIVIL SOCIETY: STILL UNDER PRESSURE — Update 2022 (europa.eu)
105
2022 Charter report 1_1_201131_2022_charter_report_en.pdf (europa.eu), p. 4.
106
IA study. E.g. the number of associations in France and in Germany grew respectively by 2.4% and by 3.4%
in the same period.
107
UIA, 2021.
33
3. WHY SHOULD THE EU ACT?
3.1 Legal basis
In light of the identified problem and objectives, as well as their socio-economic value in the
single market created by associations, the initiative could be based on Article 114 TFEU on the
approximation of national rules for the establishment and well-functioning of the single market,
Article 50 TFEU on attaining the freedom of establishment for associations in the single market
or on article 352 TFEU, which provides an appropriate legal base when no other provision in
the Treaty gives the necessary powers for EU institutions to adopt a measure, depending on the
precise content.
The main aim of this initiative is to address the barriers described in section 2 which create
fragmentation with regard to applicable rules on associations in the single market, resulting in
legal uncertainty, undue administrative burden and costs. Therefore, Article 114 TFEU could
be an appropriate legal basis for measures aiming at harmonising aspects of national
legislations on cross-border activities of associations, for instance the conditions for
recognition of the legal personality of associations, which is the one of the most basic
conditions, if an association seeks to conduct activities in another Member State and thus
enable associations to enjoy their freedom to provide services and goods in the single market.
Article 114 TFEU could also be the appropriate basis for measures aiming at the approximation
of national laws concerning the freedom of movement of capital (excluding any measure on
taxation) and the capacity of associations to send/receive capital in the single market, in
particular to benefit from cross-border funding and donations.
Article 50 TFEU could serve as legal basis for measures that facilitate the exercise of the right
of establishment of associations and their mobility (cross-border conversions and mergers of
associations). This could also cover rules on the registration and the formalities linked to the
registration which limits the possibility for associations to operate cross-border and thus enable
them to enjoy their freedom of establishment and association in the single market.
Article 352 has been used for the creation of new forms of legal entities at EU level,108
which
leaves unchanged the different national laws in existence and does not aim to approximate the
laws of the Member States.109
The legal basis will depend on the final content of the proposal. For each of the available policy
option, it is necessary to assess which could be the appropriate legal basis. In light of the single
market objectives, the scope, and the approach of preferred option (see section 8), this initiative
is likely to be based on either Article 114 TFEU, Article 50 TFEU or on a combination of the
two. This initiative is subject to the shared competence of the EU, and therefore the subsidiarity
and proportionality principles apply.
108
For instance Regulation 2157/2001 on the European association, Regulation 1435/003 on the European
cooperative society.
109
CJEU C 436/03
34
3.2 Subsidiarity: Necessity of EU action
The key problem drivers result from regulatory diversity and/or restrictions among Member
States. The current situation, as described in previous sections, demonstrates that the problem
is not properly addressed at national level and that, in the absence of mutual recognition
mechanisms among Member States, its cross-border character requires a European solution to
remove identified barriers to the cross-activities and cross-border mobility of associations in
the EU single market.
The problem is not only limited to certain territories or regions but appears widely as
associations are present in all Member States. There is little coordination by individual Member
States to facilitate cross-border activities, mobility and capital transfers of associations. Such
coordination, although theoretically possible, appears unlikely in the near future110
. For
instance, notwithstanding the withdrawal in 2005 of the Commission proposal for a Council
regulation on the statute for a European association, only few Member States have legislated
in ways to facilitate cross-border aspects of associations: either by enacting provisions to allow
establishing branches abroad111
, s to allow associations’ cross-border mobility to another
Member State in some way112
, or by ratifying the Council of Europe Convention on the
recognition of international non-governmental organizations (which may cover also
associations)113
have introduced measures allowing cross-border mergers and divisions,
whereas one Member State expressly prohibits merger and division of domestic associations
with associations which are not entered in the national register.114
In particular, individual
action or inaction by Member States, most often, focuses on their specific national context and
usually would not seek to facilitate the cross-border dimension. Relying on Member State
action alone, it is likely that the legal, administrative, and economic barriers for associations
would therefore persist.
The objective of this initiative cannot be achieved sufficiently by the Member States and can
be better achieved at Union level.
3.3 Subsidiarity: Added value of EU action
Without intervention at Union level, Member States will keep their national rules, resulting in
the continuation of fragmentation of requirements and limitations, therefore not allowing a
level playing field for associations in the single market. As indicated in the European
110
Although the existence of legal forms at EU level for cross-border cooperation such as the Territorial Grouping
for Territorial Cooperation (EGTC), they ultimately cannot meet the objectives of the current initiative (as
explained in Annex 8). Furthermore, Annex 9 details existing EU legal forms that may be partially used by non-
profit associations for cross-border purposes and their specific limitations.
111
Bulgaria, Croatia and Cyprus.
112
Luxemburg, Italy and Portugal.
113
Netherlands.
114
Estonia.
35
Parliament’s resolution, the intensity and volume of cross-border activity of associations does
not reach its potential. Only EU action would enable the adoption of common or mutually
recognised rules that would ease the cross-border activities and mobility of associations. By
acting, the EU would provide a clear and predictable framework enabling associations to fully
benefit from their single market freedoms. Indirectly, EU intervention may potentially help to
promote the diversity and strengthen the potential of the non-profit organisations, of which
associations are the dominant legal entities, thereby contributing to unleashing the full potential
of the non-profit sector.
4 OBJECTIVES: WHAT IS TO BE ACHIEVED?
The links between the identified problem and the objectives of this initiative are presented in
Figure 5 below.
Figure 5: Tree table of the links between problems and objectives.
4.1 General objectives
The general objective of the initiative is to improve the functioning of the single market by
removing legal and administrative barriers for associations operating in more than one
Member State. This includes enabling associations to fully benefit from the single market
freedoms, in particular the freedom of establishment (including facilitating mobility of
associations), the freedom to provide and receive services and goods, as well as the free
movement of capital (such as cross-border donations and membership fees). Removing these
barriers would make it easier for associations to engage in activities across Member States and
enable them to unleash their full potential to generate economic and societal value in the EU.
Although no direct cause-effect link may be established and while this initiative is centred on
the functioning of the single market for associations, improving the conditions for associations
to operate in the single market could have indirect spill-over effects on strengthening civil
36
society in the EU and its potential to lower the threshold of citizens’ engagement in different
sectors across the Union.
4.2 Specific objectives
The specific objective of the initiative are:
1- Improve possibilities for an association to have its legal personality recognized in
other Member States, thereby ensuring equal treatment in the single market
Associations conducting cross-border activities do not benefit from the same legal recognition
across the EU. Recognition of legal personality – whether automatic across the Union or mutual
between Member States – can overcome burdensome bureaucratic procedures to be repeated
in each Member State in which associations wish to expand their activities, by notably avoiding
multiple registrations or setting up multiple legal entities, resulting in red tape and additional
costs.
2- Reduce the regulatory formalities for associations operating in more than one
Member State
An enabling regulatory framework for the cross-border activities and mobility of associations
is necessary in order for them to operate seamlessly in the single market. Reducing the
regulatory formalities, in particular regarding existing barriers to their cross-border activities,
such as administrative formalities related to registration, service provision, receiving capital,
as well as related to the recognition of legal personality, cross-border conversions, and cross-
border mergers.115
Digital solutions when addressing these administrative and regulatory
formalities should be also considered to address problems described under Driver 3 in Section
2.3.3.
The progress to achieving the specific objectives can be measured through the monitoring
indicators described in Section 9.
5 WHAT ARE THE AVAILABLE POLICY OPTIONS?
5.1 What is the baseline from which options are assessed?
In the baseline scenario, no policy intervention is introduced at the EU level, with associations
continuing to be governed exclusively by national law. Existing barriers (as described in
Section 2) will most likely remain or in some cases worsen in light of societal challenges, future
crises and market developments (see Section 2.4).
115
These are all defined in the Glossary.
37
The baseline includes a brief description of the wider socio-economic context and the relevant
policy action at EU and international level that might impact on the magnitude of the problem.
5.1.1 Socio-economic context
Associations will continue to play an active role in the society and, many of them, will continue
to provide goods and services in areas of limited profitability (i.e. the goods and services they
provide are partially at market prices, partially below).116
In addition, when this is part of their
mandate, associations will continue to build awareness and advocate for policies and
legislation, as well as the protection and promotion of fundamental rights. They will promote
engagement and effective participation of citizens in the policy-making processes and in so
doing contribute to the democratic foundations of the Union.117
They will do all the above
either nationally or beyond the borders of individual Member States. Associations will offer
essential services for society and will play an instrumental role in the fight against current or
new societal challenges. For example, ageing demographics will exponentially increase the
need for elderly care and healthcare services, both of which are sectors where associations are
key service providers.118
Such trends will also continue in the absence of policy intervention,
with associations continuing to face the identified regulatory and administrative burden when
operating across borders.
Although the vast majority of associations operate in a domestic setting, an increasing role for
international NPOs and findings from the Public Consultation and the survey conducted under
the IA study, are an indication that a growing number of associations are expected to either
operate or are exploring opportunities to operate in another Member State, therefore
magnifying the identified problem.119
Not removing the identified barriers burdening
associations already active cross-border (an estimated of 8% of all associations in the EU) and
discouraging those who would be interested to expand cross-border, would ultimately limit the
distribution of the value created by these associations and by their potential individual and
corporate donors, instead of diffusing these services, goods and assets across different Member
States. Consulted associations expressed the need for a level-playing field to carry out their
purposes which often require by nature a cross-border dimension.120
Solidarity going in
principle beyond borders and the societal challenges linked with a ‘perma-crisis mode’ in
recent years – including challenges related to the green and digital transitions – require scaling
of action of all actors.
Some relevant megatrends are, therefore, identified to strengthen the dynamic baseline through
foresight-based analysis. First, associations play an important role in prospects and anticipation
when it comes to “Changing nature of work”121
. In this regard, associations, as social economy
actors, offer participatory business and management models which increase employees’
wellbeing and improve employability for those with a distance to the labour market, thereby
116
IA study.
117
Europe's civil society: still under pressure - 2022 update | European Union Agency for Fundamental Rights
(europa.eu) and 2022 Rule of law report (europa.eu).
118
Increasing demographic imbalances | Knowledge for policy (europa.eu).
119
The European Parliament resolution of February 2022 is also based on this assumption.
120
Indicated by multiple associations interviewed during the scoping phase of the IA study.
121
Changing nature of work, Megatrends hubs, Competence Centre on Foresight of the Joint Research Centre,
European Commission.
38
contributing to sustainable working environments. Also, associations will continue to play an
important role by upskilling and reskilling people with a distance to the labour market and in
jobs transition. Associations active in the area of “Climate change and environmental
degradation”122
will continue to play a crucial role in the development of political agendas at
the local level (e.g., nature preservation, biodiversity) or EU and global level (e.g. climate and
environmental protection action, wildlife protection); and they can act as innovators when it
comes to raising awareness, designing new circular and ecological products, services and
business models. In doing so, associations active in the environmental sphere are also
contributors when coping with resources and environmental challenges related to the
“Growing consumption”123
. For example, agrifood related associations may bring alternative
solutions through innovative methods applicable in agriculture and in support of a sustainable
food supply. The experience of many associations in the circular economy is also expected to
bring valuable contributions in terms of recycling, upcycling, eco-design, shared and
collaborative economy. Other megatrends where associations are expected to offer a major
contribution in the future are the “Shifting health challenges”124
as many associations are
operating in health, care and social service provision where they drive innovation and bring
new organisation methods, techniques and services. Finally, associations are expected to
continue playing a major role in the anticipation towards the “Increasing demographic
imbalances”125
: for example, by offering a major contribution to aid and development
programmes for most vulnerable countries and regions in the world.
5.1.2 Costs of operating cross border (baseline)
Estimates in the IA study show that, without policy intervention, up to 75 000 new jobs (i.e.
additional FTEs working cross-border) and an additional contribution to the EU GDP of
EUR 4.2 billion would not be generated, as up to 185 000 new associations would not be
created. This reflects the “opportunity cost” of no action, in line with the maximum theoretical
potential. Given the risk of overestimation, a second scenario was developed (see Section 2).
This scenario shows that without policy intervention, up to 63 000 jobs, 3.5 billion GDP of
EUR and 155 000 new associations would not be created.
Based on desk research, interviews and stakeholder surveys conducted in this IA, the most
relevant costs related to identified barriers are categorised in two main cost types and several
costs subtypes:
1) Associations operating across borders that are bound to allocate resources to
unnecessary or excessive compliance activities and administrative burden. They
experience costs grouped in three subtypes: (i) information cost (internal), (ii)
122
Climate change and environmental degradation, Megatrends hubs, Competence Centre on Foresight of the Joint
Research Centre, European Commission.
123
Growing consumption, Megatrends hubs, Competence Centre on Foresight of the Joint Research Centre,
European Commission.
124
Shifting health challenges, Megatrends hubs, Competence Centre on Foresight of the Joint Research Centre,
European Commission.
125
Increasing demographic imbalance, Megatrends hubs, Competence Centre on Foresight of the Joint Research
Centre, European Commission.
39
compliance cost (internal), (iii) direct cost/external advisory cost (external running
cost).
2) Associations that want to operate and cooperate in the single market but are hindered
in doing so due to high (perceived) cost of expansion. They experience: (i) internal staff
costs, including the time spent to familiarise with national legislation (e.g. labour and
tax laws) applicable in the Member State where the association wish to expand its
operations and the time spent to prepare such expansion, (ii) registration costs/
administrative fees, (iii) external advisory services (e.g. legal and/ or tax advisory,
accounting services etc.)
The above cost categories are mainly related to the three problem drivers described in Section
2.3 informing the problem definition (i.e. cross-border aspects for associations are either
unregulated or regulated in varying ways across Member States; lack of mutual recognition of
legal personality of an association when operating cross-border; and excessive administrative
practices and processes when operating cross-border).
Operating costs
It is important to note that associations face costs of operating cross-border that consist of (i)
fixed costs that cannot be reduced by policy intervention, (ii) excess cost126
that exist (or
potentially exist) and can potentially be avoided, due to policy intervention. When looking at
the cost for the launch of operation in another Member State, the excess cost also represents a
barrier to entry in the single market. Therefore, cost reductions do not necessarily equal ‘cost
savings’ as these costs block off an entry rather than being reduced.
When it comes to (recurrent) cost of operating cross-border, factors linked to country
specificities and the size and types of activity of the associations are determining and may vary
greatly. While some contextual factors may improve the situation (e.g. digitalisation, more
cooperation between certain Member States), others may worsen costs and administrative
burden. Moreover, the factor whether an association is active in two or more Member States
plays a role. Typical costs reported consist of staff dealing with cross-border complexity and
external services, including legal, accounting and tax advisory services faced by associations
to run operations in another Member States. In addition, there are also annual legal, accounting,
tax or other advisory services that associations require. As the targeted survey and in-depth
interviews of the IA study show, a clear improvement of the situation cannot be expected
without policy intervention.
Bearing these considerations in mind, under an assessed timeframe of 15 years, no action is
expected to lead to the excess cost for associations operating cross-border, as outlined in the
Table 6 below:
126
IA study. “Excess costs” are defined as the unnecessary cost which could be avoided by solving the problem.
These need to be distinguished from the actual cost which include also the unavoidable component of the cost
category. More details in Annex 4.
40
Table 7: Excess cost for associations operating cross-border (recurrent).127
Per year 15 years
Information cost (internal staff) ~ EUR 350 million ~ EUR 5.2 billion
Compliance cost (internal staff) ~ EUR 190 million ~ EUR 2.8 billion
Direct cost/External advisory cost
(External running cost)
~ EUR 230 million ~ EUR 3.5 billion
Launch costs
The current legal and policy framework requires familiarisation with the national requirements,
the set-up of a correct legal form and registration in the Member State where the association
wishes to expand. Registration costs (and obligations) vary across Member States, ranging
from 0 (free of charge) to EUR 300 – EUR 350.128
Most associations also need to rely on
external legal or tax advisory support for their establishment in a new jurisdiction, while it is
estimated that associations’ own staff spends between 9-20% of FTE to organise the
establishment of operations in another Member State (per launch).129
The elements above determine the estimation of current average (one-off) cost130
for setting
up cross-border operations (per launch). This baseline is calculated at EUR 5 650 capturing
an excess cost131
of EUR 2 150.132
This means that an association willing to expand cross-
border could save up to a maximum estimated EUR 2 150, in case of policy intervention,
compared to the current situation, which brings excessive (unnecessary) cost due to the
127
IA study. “Staff costs”: input figures based on surveyed associations, expert interviews (time spent on cross
border activity and complexity: information and compliance). Direct costs: annual legal, accounting, tax or other
advisory services that associations require. Input figures based on surveyed associations. Calculations based on
310 000 current associations operating cross border. For more detail see Annex 4 (Section 2.4).
128
IA study. With the exception of few countries where registration fees depend on the value of
associations/foundation’s assets and can exceeds EUR 1 000 (e.g. Malta), or notarial deeds are prescribed by the
law for specific cases (e.g. Belgium for INPAs, ranging EUR 2 000 – 2 500). Various Member States (e.g.
Belgium, Bulgaria, Estonia, Finland, Hungary, Latvia, Lithuania, Poland, Slovenia) offer the opportunity of digital
registrations, generally at lower fees compared to paper forms.
129
IA study. This entails one off costs for staff to familiarise with the legislation in the new country, as well as to
check, prepare and conduct the administrative formalities required by the Member State where the associations
intend to expand. Examples from the conducted interviewees (14 out of the 33 associations), reported that
associations in cases had to rely on pro-bono law firms to understand the requirements of establishment.
130
IA study. The estimates are based on figures provided by associations on their costs for launching cross-border
operations, via the survey and in-depth interviews. Launching costs were structured according to the three main
cost items identified to set up the operations in another Member State. For more detail see Annex 4 (Section 3.3).
131
IA study. Starting from total cost (EUR 5 550) it is estimated how and if these costs could be reduced through
policy intervention based on evidence from in-depth interviews, backed by assessment based on the legal analysis,
resulting in a (maximum) cost reduction of EUR 2 150, or “excess cost” reduction.
132
The current excessive levels of inflation and predictions on inflation development are expected to cost
increases. The cost expressed should thus be interpreted in real term cost at 2023 price levels.
41
unresolved problem.133
It should be noted that the costs for launching cross-border operations
are not expected to significantly change in the absence of policy intervention. While some cost
linked to the establishment of operations or even the necessity of establishing for certain
activities may be reduced over time due to increasing digitalisation, other factors such as further
stringent rules in certain Member States may increase the complexity of the situation and the
launch of new activities in certain Member States.
5.1.3 EU level action
When it comes to legislation at EU level, there is no harmonisation or approximation of the
national laws regarding the cross-border dimension of associations, whether related to activities
mobility or movement of capital.134
The status quo would likely continue without EU action of
binding nature.
At the same time, a number of ongoing and forthcoming initiatives at EU level are relevant and
potentially conducive to a more dynamic baseline. First, the Single Digital Gateway facilitates
online access to information, administrative procedures, and assistance services that EU
citizens and businesses (also possibly capturing associations engaged in economic activities to
an extent) need when trading, establishing themselves or expanding their business across
borders. By the end of 2023, online access to the most important administrative procedures in
21 areas will be ensured in all EU Member States including certain registering procedures. This
has the potential to somewhat help associations, among other actors, depending on its
implementation and the relevance of these administrative procedures to associations. Second,
the European Media Freedom Act,135
which aims at alleviating the fragmentation of national
rules undermining the efficiency of the European internal media market, sets out, among others,
the framework for a structured dialogue with stakeholders and explicitly civil society
(including associations). Freedoms of expression and information will continue to be
strengthened in this framework and will, therefore, contribute to an enabling environment for
associations operating cross-border in the single market.136
Third, the non-binding measures
that the Social Economy Action Plan envisages (as indicated in the Introduction and in Annex
9), will complement this initiative by providing non-binding recommendations to Member
States to better design and implement enabling policies for the social economy, including
associations, (Council Recommendation) and provide a clearer understanding of the rules for
cross-border taxation of non-profit organisations like foundations and associations (two Staff
Working Documents). Furthermore, regarding VAT, associations engaging in economic
activities that qualify as SMEs can benefit from simplified rules which will help reduce VAT
compliance costs as of 2025 (as explained in Section 2.2).
133
Costs of staff and external providers differ significantly depending on the local economic circumstances and
requirements. The estimates thus provide an indication of what can be expected and must not be taken as exact
cost structures for any association across the EU.
134
Although the Commission has proposed a Statute for a European Association (91/273), unsuccessfully.
135
EUR-Lex - 52022PC0457 - EN - EUR-Lex (europa.eu)
136
See European Parliament resolution of February 2022: i) underling the importance of impartial and independent
information on the activities of non-profit organisations in the private and public media as well as the access to
pluralistic information as key pillars of democracy; ii) highlighting the Parliament resolution on SLAPPs of 11
November 2021.
42
Depending on the exact content, the measures mentioned above could facilitate the potential of
associations to operate cross-border in the single market. However, their positive impact is
likely to be limited in relevance to the objectives of this initiative, as these measures neither
target cross-border aspects directly nor are all of them legally binding.
5.1.4 International level
The Council of Europe initiatives mentioned in the Introduction (1.3 Legal Context) did not
have much uptake by EU Member States (8 have thus far ratified the Council of Europe
Convention introduced in 1986).137
A recent report of civil society’s perception of their
implementation shows that Council of Europe Member States have largely not taken these
instruments into account in their policymaking, though it does not specify the reasons.138
This
situation is not expected to change, given the non-binding nature of these initiatives.
5.2 Description of the policy options
The following alternative policy options have been constructed from a list of policy measures,
based on the findings of the IA study. These measures were screened139
to identify policy
options that should be retained for further analysis. The screening process resulted in a list of
three self-standing policy options retained for impact assessment (see Figure 6 below as a part
of the intervention logic).
Figure 6: Intervention logic.
137
CETS 124 - European Convention on the Recognition of the Legal Personality of International Non-
Governmental Organisations (coe.int), European Treaty Series - No. 124; Recommendation on the legal status of
non-governmental organisations in Europe, CM/Rec (2007)14 of the Committee of Ministers; Fundamental
Principles on the Status of Non-governmental Organizations in Europe
138
Council of Europe Expert Council of NGO Law: The Legal Space for Non-Governmental Organisations in
Europe. Civil society’s perception of the implementation of Council of Europe CM Recommendation (2007)14
to Member States on the Legal Status of Non-Governmental Organisations in Europe, p. 39.
139
Screening was developed in accordance with Tool #17 of the Better Regulation Toolbox. The longlist of
measures was assessed against seven criteria, namely: feasibility, stakeholder acceptability, effectiveness,
efficiency, proportionality, EU value added, and coherence.
43
All retained options address the general objective and the specific objectives, as further
described under each option below.
5.2.1 Option 1: Establish an EU-level legal form of association
Sub-option 1a: An EU level legal form: ‘The European Association”
This sub-option of policy option 1 (hereinafter “PO1a”) fully prescribes an EU level legal form,
i.e. “The European Association”. Under this sub-option, the initiative would introduce a
European legal form of association (the “European Association”), which would regulate all
aspects relevant to the functioning of an association, including rules on the formation,
registration, constitution, functioning, financing, dissolution, liquidation and insolvency, and
would co-exist with legal forms of associations at Member State-level while not replacing them
(details in Annex 9). It would also ensure non-discrimination and equal treatment, when it
comes to European Associations as service providers, in line with the Services Directive.140
Regarding formation, interested natural and legal persons could set up a European Association
and existing associations may form one by conversion. The main criterion to form a European
Association would be to have a link to at least two Member States. This can be one of the
following: citizenship or residence of members, employees, or volunteers; the location of its
activities or the registered location of established branches; formation through merger of
existing associations domiciled in at least two separate Member States.
The European Association would enjoy automatic recognition of its legal personality across
the Union. While it would be regulated by EU law, with regard to rights, it would enjoy at
minimum, equal treatment with national associations in the Member States where it would be
domiciled and/or engage in activities (i.e. provision of services or goods). Furthermore, it
would have rules on cross-border mobility (mergers, divisions and conversions in cross-border
140
Directive 2006/123/EC on services in the internal market of 12.12.2006.
44
contexts). European Associations would enjoy non-discrimination as receivers of capital
transfers, such as donations, including the non-discrimination of their donors.141
Regarding implementation, Member States would designate a competent authority, with
defined powers. Competent authorities would be required to cooperate and exchange
information with each other.
Registration of the new legal form would be done at Member State level, in line with the ‘digital
by default’ principle: setting up the European Association would be possible in a fully digital
manner, using standardised on-line procedures and entailing standardised information required
for the registration of the new legal form. Member States will be required to establish a digital
register (or adapt an existing register) and make publicly available essential information about
the associations registered under this legal form. To facilitate access to information about
registered European Associations, Member State registries would be interoperable with or
connect to an EU level platform/portal either to be established or building on existing initiatives
(i.e. the Single Digital Gateway).
The European Association would be well suited for those associations interested in being active
in many Member States. Given the relevant cost and administrative effort of setting it up, it
would be less beneficial for small associations or those with only occasional activities across
borders.
Although this sub-option shares with the Commission proposal of 1992 (and its revision in
1993) the general objective to regulate all aspects for associations by creating a European
statute for associations, it differs in its policy focus, and in particular in the following elements:
- As regards key provisions on mobility, the former proposal did not mention the possibility
for the European Association to merge. On the contrary, PO1a would provide for rules in
order for associations established in the new legal form to merge with other associations,
both domestically and cross-border, without such merger resulting in the involuntary
termination, prohibition or dissolution, or suspension of the activities of the organisation.
- As regards online registration and the digitalisation of the registries. PO1a, as stated above
and given the digitisation of the society, would ease the access to information on
associations for the public. The former proposal did not provide for online registration or
for rules concerning an EU level platform.
- Regarding the rules governing the financing of the European Association, while the past
proposal allowed the European Association to avail itself of all forms of financing under
the most favourable conditions applying to associations in the Member State in which it
has its registered office (Article 41 of the Commission proposal of 1992), sub-option PO1a
is more specific and goes deeper. It would oblige Member States to allow a European
Association established, registered or operating in their territory to solicit and receive
capital transfers, such as donations. In terms of procedure, PO 1a would be based on Article
141
Following the principles of the CJEU, inter alia in C‑78/18.
45
352 TFEU,142
requiring unanimity; while the former Commission proposal was based on
Article 100a of the Treaty establishing the European Economic Community (current Article
114 TFEU), which links with the ordinary legislative procedure of qualified majority.
Sub-option 1b: An EU level legal form: “The European cross-border Association”
This sub-option of policy option 1 (hereinafter “PO1b”) establishes an EU level legal form
covering only cross-border aspects: “The European cross-border Association”.
Under this sub-option, the initiative would introduce a European legal form of association at
EU level, as under sub-option 1a, but instead of a fully prescribed legal form, this sub-option
would exhaustively prescribe at EU level only cross-border aspects143
and, to the extent needed
for coherence, main features of the new legal form,144
while otherwise referring to existing
Member State law, as it regulates comparable entities. The new legal form would co-exist with
legal forms of associations at Member State-level and would not replace them. Member States
would enact the necessary provisions for the effective application of the new legal form where
relevant matters that the Regulation refers to are not sufficiently regulated.
The European cross-border Association would enjoy automatic recognition of its legal
personality across the Union.
Key elements of the new legal form to be prescribed at EU level would under this sub-option
include, in particular, the following:
• specific rules concerning the formation of the new legal form; for instance, the main
criterion to form a “European cross-border association” may be to have a link to at least
two Member States. This can be one of the following: citizenship or residence of
members, employees, or volunteers; or based on the registered location of established
branches; formation through a merger of associations domiciled in at least two separate
Member States.
• specific rules allowing for cross-border membership and governance roles (nationality
and residence).
• non-discrimination and equal treatment, when it comes to European associations as
service providers, in line with the Services Directive145
.
• non-discrimination of the new legal form, as receiver of capital transfers (excluding
taxation), such as donations, in cross-border contexts, including the non-discrimination
of donors based on nationality or place of residence.
142
This legal basis has been confirmed by the CJEU as the appropriate legal base for new legal forms created at
EU level. See Case 436/03.
143
Inter alia ability to open branches abroad, cross-border mobility procedures, ability to provide services without
a local establishment, and ability to solicit and receive funding across borders.
144
Inter alia non-profit aim, non-distribution constraint, full ability to engage in economic activities and right to
acquire legal personality
145
Directive 2006/123/EC
46
• cross-border conversions without undergoing a dissolution and liquidation procedure,
by providing relevant safeguards.
• rules and safeguards on the process of mergers and divisions of the new legal form.
Regarding implementation, Member States would designate a competent authority with
defined powers. Competent authorities would be required to cooperate and exchange
information with each other.
Registration would be at Member State level as for PO1a, in line with the ‘digital by default’
principle: setting up the European cross-border Association would be possible in a fully digital
manner, using standardised on-line procedures and entailing standardised information required
for the registration of the new legal form. Member States will be required to establish a digital
register (or adapt an existing register) and make publicly available essential information about
the associations registered under this legal form. To facilitate access to information about
registered European cross-border Associations, Member State registries would be interoperable
with or connect to an EU level platform/portal either to be established or building on existing
initiatives, such as the Single Digital Gateway.
The European cross-border Association, similarly to sub-option PO1a, would be well suited
for those associations interested in being active in many Member States. As such, it would
solve current obstacles concerning the right of establishment and free provision of goods and
services across the EU. It would also partially solve issues related to the cross-border receipt
of capital to the extent those issues concern seeking approvals and reporting in some Member
States with regard to donations.
As in PO1a, this sub-option would be based on Article 352 TFEU, and would take the form of
a regulation, as this option would not approximate national rules as required for Article 114
TFEU. The fact that this policy option would exhaustively prescribe at EU level the cross-
border aspects and the core features of the new legal form further justifies the choice of this
legal basis.
The Commission proposal of 1992 (and its revision in 1993) and this sub-option differ in their
scope and procedure in ways already described concerning PO1a. In addition, in terms of policy
focus, a key additional difference concerns a more limited scope on elements relevant for cross-
border contexts.
5.2.2 Option 2: Harmonise common minimum standards for cross-border
activities of associations
Under this option (hereinafter “PO2”), the initiative would harmonise common minimum
standards for the cross-border activities and mobility of associations across Member States. It
would contribute to reducing the differences between national association laws. PO2 would
imply in practice removing or amending existing provisions or introducing new provisions in
Member State law, in particular for the purpose of facilitating cross-border mobility of
associations, the provision of services and goods and the free movement of capital (i.e.
donations), but also rules on membership and governance roles to allow for cross-border
dimension.
47
In detail, the initiative would harmonise national association laws to the extent needed to
facilitate the cross-border aspects mentioned above. The key provisions to be required mirror
those mentioned under PO1b, mutatis mutandis.
Existing registration requirements related to e.g. establishment and provision of goods and
services, would not be prohibited as such, but they would be required to serve justified purposes
and be non-discriminatory and proportionate, and in line with existing EU legislation, such as
the Services Directive.146
Moreover, the possibility for a fully online registration and the existence of digital registers
and standardised on-line procedures should be encouraged under this option, in line with the
‘digital by default’ principle and bearing in mind proportionality and subsidiarity, for the
purpose of facilitating the registration of cross-border associations, as well as exchange of
information among Member States and at EU level. This could possibly be facilitated by the
Internal Market Information System.147
Compatibility of the said registers with the Single
Digital Gateway would be explored. Overall, digital procedures and tools would also facilitate
administrative formalities linked with registration, cross-border merger, cross-border
conversion, or cross-border donations.
Associations could automatically benefit from these harmonisation measures. Depending on
the scope of harmonisation, all associations may be affected by the new rules, as the respective
rules governing them would partially change. Under this option, partial harmonisation of
national laws would lead to a regulatory simplification for associations in cross-border
contexts, thanks to an approximation of relevant rules and given that sufficient rights and
safeguards would be provided for their cross-border mobility and activities regulated at EU
level. It would be relatively straightforward even for smaller associations or those with only
occasional engagement across borders.
The legal instrument would likely be a directive. Implementation of this Directive would
require Member States to transpose its provisions into their national law thereby reducing
regulatory fragmentation for associations operating across Member States. The likely legal
base of this option would be either Article 114 or 50 TFEU, or a combination thereof, taking
into account the material scope of the initiative148
, as this option would approximate national
laws by laying down minimum standards.
5.2.3 Option 3: Create at Member State level an additional legal form of
association designed for cross-border purposes (“the cross-border
association”) and recognised by Member States
This option (hereinafter “PO3”) combines elements from PO1 (creation of legal form) and PO2
(partial harmonisation of national laws). It would require Member States to introduce in their
national legal systems a new legal form of association for cross-border purposes (‘the cross-
146
An example: proportionate registration requirements could be required by MS for taxation purposes or when
the foreign association hires local staff.
147
Regulation (EU) No 1024/2012 of the European Parliament and of the Council of 25 October 2012 on
administrative cooperation through the Internal Market Information System.
148
See Legal Context under Section 1 for details.
48
border association’). Member States would transpose common provisions set by EU law into
their national law (with relative flexibility to adapt them to the national setting), thereby
approximating rules and administrative procedures for associations operating across Member
States and improving legal certainty and the level-playing field in the single market.
The new legal form would be specifically designed for cross-border membership, governance,
activities and would also allow for cross-border mobility.149
It would encompass only
requirements and safeguards necessary for facilitating the said cross-border purposes, and it
would co-exist alongside existing legal forms for associations in national law and would not
replace them.150
Those interested could form a ‘cross-border association’ in several ways,
including by setting up a new one, converting from an existing association, or by a merger of
several existing associations.
Key elements of the new legal form to be prescribed by EU law would be the same as descibed
under PO1b (in Section 5.2.1 above).
Once established and registered in the Member State of domicile, ‘cross-border associations’
would not need to establish in each Member State separately, as their legal personality would
be recognised either automatically, with limited discretion for justified exceptions for Member
States or, alternatively through a simplified procedure (mutual recognition).
The principle of equal treatment of ‘cross-border associations’ vis-à-vis existing legal forms of
associations in the Member States, as well as safeguards concerning procedures for recognition
of legal personality, would be established. For instance, PO3 would set a maximum duration
by which the recognition procedure for ‘cross-border associations’ must be completed and
safeguards to lead to a duly substantiated decision by the competent authority in the host
Member State (e.g. within three months after the date on which the applicant's complete file
was submitted).
Registration would be done at Member State level, in line with the ‘digital by default’ principle:
setting up the “cross-border association” would be possible in a fully digital manner, using
standardised on-line procedures and entailing standardised information required for the
registration of the new legal form, to facilitate the registration of the “cross-border
associations”, as well as sharing information between Member States and to the EU level. In
order to further facilitate the recognition of the legal personality and the registration of cross-
border associations, as well as exchange of information among Member States and at EU level,
Member States would be required to establish a digital register (or adapt an existing register)
149
See also Belgian law entitled « Loi sur les associations sans but lucratif, les associations internationales sans
but lucratif et les fondations » of 2.05.2002 establishing the “International association without a profit purpose”
(AISBL/IVZW). The AISBL is a Belgian legal form which requires associations to specify in their statute and to
concretely pursue an objective of international public utility. It allows people and organizations from any country
to form such an association. It differs from our initiative because our scope is the EU territory and the European
associations.
150
Importantly, this also differentiates this option from the Commission proposal for a Directive on single-member
private limited liability companies (COM(2014)212), based on Article 50 TFEU, which was withdrawn in 2018.
Creating legal forms at national level, it concerned, first, general rules for single-member private limited liability
companies and, second, rules on the formation, registration, articles of association, single share, share capital,
structure and operational procedures.
49
and make publicly available essential information about the “cross-border associations”
registered. Compatibility with the Single Digital Gateway would be considered as well as
potential use of the Internal Market Information System, for the same purposes as explained
for PO1 above (see Section 5.2.1).151
Regarding implementation, Member States would designate a competent authority, with
defined powers. Competent authorities would be required to cooperate and exchange
information with each other.
Existing registration requirements related to e.g. establishment and provision of goods and
services, would not be prohibited concerning this new legal form, but they would be required
to serve justified purposes and be non-discriminatory and proportionate, and in line with
existing EU legislation, such as the Services Directive.152
In light of its scope and approach and depending on the exact content of the proposal, the likely
legal base of this option would be either Article 114 or 50 TFEU, or a combination thereof, due
to the purpose of approximating certain aspects of national laws,.153
With regard to PO1b, PO3
would prescribe cross-border aspects at EU level on a very targeted manner. It would only
encompass those requirements and safeguards needed to approximate national laws by
introducing the cross-border aspects necessary for this new legal form to operate. To be noted
that legislative proposals based on Article 50 TFEU are limited to directives.
5.3 Options discarded at an early stage
In the course of this IA, some of the originally conceived options, as identified in the IA study,
were not retained for a full assessment as they were not considered feasible or realistic in light
of their advantages, but also crucial disadvantages. The said discarded options are:
- Non-legally binding options (i.e. Council recommendations, information campaigns,
and guidelines);
- European legal status for public-benefit associations;
- Harmonisation of common standards for associations.
In particular, the non-binding options were discarded due to their lack in effectiveness, whereas
the creation of a European legal status for public-benefit associations was considered not
feasible in light of the limited competence of the EU in the area of taxation. Finally, the
harmonisation of common standards for associations was considered unlikely to be accepted
by Member States given the strong cultural roots embedded in the national association law and
the scope of the envisaged harmonisation under this option. For more details see Annex 13.
151
Regulation (EU) No 1024/2012 on administrative cooperation through the Internal Market Information System.
152
An example: proportionate registration requirements could be required by MS for taxation purposes or when
the foreign association hires local staff.
154
That can be a specific register for associations.
50
6 WHAT ARE THE IMPACTS OF THE POLICY OPTIONS?
Box 9: Treatment of qualitative and quantitative analysis regarding the impact of the policy options.
The following assessment provides a qualitative analysis of the specific economic impacts
generated by each proposed policy option, based on the evidence gathered from diverse
sources. It also provides, to the extent possible, a quantitative analysis of benefits and costs
relating to the main economic impacts. The cost/benefit analysis is not fully comprehensive,
due to significant data gaps and limitations, as explained in section 1.4. Therefore, the
quantification of costs and benefits is based on a number of assumptions (see Annex 4)
deriving from different sources of input: the Commission’s assessment of stakeholder
feedback to the Public Consultation, additional targeted stakeholders survey and interviews,
existing literature, and other relevant sources of knowledge on the matter (e.g. sectoral
studies and data gathering). When it comes to the indirect economic benefits, the aim of this
assessment is to provide ranges of the magnitude of potential impacts generated by each
policy option, rather than exact monetisation.
Despite the mitigation measures (developed in this section) and application of conservative
estimations, a potential overestimation for the potential reduction of costs and potential
benefits cannot be fully excluded.
A detailed breakdown for the calculation of costs and benefits for associations can be found
in Annex 4. All costs are considered administrative costs since they relate to registration,
information, and adapted administration requirements. Annex 3 provides an overview of
costs and benefits per target group assessed for the preferred option.
Nominally, the current excessive levels of inflation and predictions on inflation development
are expected to cost increases. The cost expressed should thus be interpreted in real term
cost at 2023 price levels.
This Section assesses the impacts of each retained policy option in relation to the identified
barriers and the drivers leading to the identified problem in Section 2. The Section analyses
the potential economic and social impacts on relevant target groups per policy option
(associations, Member States, citizens). Environmental and climate change impacts are only
present in an indirect manner and, therefore, are briefly addressed for all policy options.
Additionally, the Section assesses per policy option the impacts on Member States (e.g. in
terms of adaptation of legislation and compliance, administration and monitoring).
The Section is structured as follows: the first part summarises the main similarities or non-
significant impacts of all policy options together, taking into account the objectives and scope
of the initiative; the second part presents specific or significant impacts per policy option. As
section 5 outlined, Policy Option 1 (PO1) has 2 sub-options: PO1a and PO1b. The sub-options
will only be referred to separately when there is a difference in terms of impact. Consequently,
references to ‘PO1’ are made for those impacts valid for both sub-options.
51
Taking into account the objectives and scope of the initiative, the main similarities or non-
significant impacts for all policy options are presented below:
a. Economic impacts on associations
Based on a combination of stakeholder surveys, expert interviews and literature, the IA study
concludes that excess cost reductions for associations are present for all POs and will result in
reduction of time allocated by their staff for the management of the cross border-related
administrative procedures, as well as in related reduced direct costs. However, when it comes
to total excess cost reduction estimates over 15 years, one needs to consider the caveats in
available data (mentioned in section 2 and section 5) and the consequent uncertainties resulting
in a possible overestimation. The direct economic impacts (excess cost reductions) for
associations per policy option are detailed in the second part of this Section.
Considering indirect economic impacts, all POs present an improvement for associations
operating or with the ambition to operate across borders in terms of:
• less burdensome access to new cross-border markets and cross-border provision of
goods and services,
• more financial and human resources that can be allocated to core activities and
purpose.
• improved safeguards for the freedom of establishment and security of operations.
Besides economic value, the impact of promoting civil rights and democracy,
environmental policy, equality, the European civil society, etc. will be leveraged,
especially for those associations active in these sectors.
For associations engaged in economic activities specifically, all POs (be it in different degrees,
as described in Section 5) would have a positive effect on the level playing field in the single
market in sectors where associations compete with for-profit companies. More precisely, cost
reduction and improved access to the single market for associations may lead to:
• increased offer of services and products in certain economic sectors (e.g. health, care,
social services), leading to considerable positive effects in terms of quality and price,
and enlarged geographic scope of the offer (e.g. new markets are reached), as well as
convergence of quality service delivery across the Union in sectors in which non-profit
associations are an active operator;
• increased specific know-how in certain sectors (e.g. healthcare, social services) and
Research and Development (e.g. international research and technology associations,
work integration), as well as economies of scale and business opportunities in various
sectors;
• increased pool of potential employees, volunteers and members engaging in the
association.
52
For PO1 and PO3, the scale of impacts depends mainly on the uptake of the new legal forms
(the scenarios for the uptake are detailed per option in the second part of the section).
Having this in mind, all POs are expected to have a positive effect on the completion and
functioning of the single market, as they bring considerable harmonising effects to enhance
cross-border activities for associations, though to a different extent. Harmonisation effects are
broadest for PO1 as it implies automatic recognition of an additional European legal form,
prescribed fully (PO1a) or partially (PO1b) at European level and through a legal instrument
more impactful in terms of implementation and level-playing field (regulation). PO2 would
imply partial harmonisation of laws on associations in the Member States regarding specific
cross-border aspects, impacting domestic and cross-border associations. PO3 would imply an
additional legal form for cross-border purposes at Member State level, thereby not affecting
the functioning of domestic associations not interested in cross-border activities, but rather
creating an option for those associations operating or wishing to operate in more than one
Member States, who could take on the new legal form which will be recognised in other
Member States. Possible risk of fragmentation and divergent interpretation linked with the
choice of the legal instrument in PO2 and PO3 may be overcome through setting safeguards
and achieving the right balance between rules prescribed by EU law and by Member State law.
b. Impacts on Member States
Changes in the legal framework may cause costs of adjustment and costs of
compliance/administrative burden for competent authorities depending on the magnitude
of these changes. In the case of this initiative, these impacts largely depend on (i) the extent of
adaptation of existing procedures for the recognition of legal personality and for registration,
(ii) the number of future registrations for cross-border associations and (iii) information costs,
when comparing the baseline with the policy options and specific changes brought by each
policy option.
Associations operating across-borders generally need to re-establish/register in the Member
States in which they expand, depending on the scope of their activities. Policy options (PO1
and PO3) that reduce this necessity will consequently reduce the burden on public authorities
in the long run. In the short term, policy options changing the requirements completely by
introducing a separate legal form (i.e. PO1 and PO3) will require competent authorities to
familiarise themselves with the new framework.
Considering one-off costs for adapting registration procedures and registers, costs depend
on the need for adaptation of current registers or for setting up a new register. This is mostly
relevant for PO1 and PO3, while PO2 will also have similar impacts (existing registration
procedures might need to be adapted), but to a lesser extent as it does not imply the creation of
a new additional legal form.
To note that, for none of the policy options an EU level registration will be foreseen, mainly
for reasons of proportionality and subsidiarity. Consequently, Member States will be
responsible for the registration of a new legal form (PO1 and PO3), as well as for the adaptation
of registration procedures in PO2. The intention is to leave Member States the flexibility
whether to adapt existing registers or establish new ones, while requiring Member States to
offer the option of online registration in case of a newly created legal form.
53
As detailed in the IA study and Annex 10, 24 EU Member States already have dedicated
registers154 in place (except for Ireland, Denmark, and Sweden). Member States without a
dedicated register (Sweden, Denmark, and Ireland), may decide to set-up a dedicated register
for cross-border associations or adapt existing registers used for associations. For instance, in
Denmark, associations must register with the Danish Business Authority to obtain a unique
‘CVR-number’ if they conduct commercial activities or wish to obtain public subsidies.
Similarly, the same practice takes place in Sweden for non-profit associations. This means that
also in countries where no association-specific register is established, mechanisms exist already
to allow associations to register. Consequently, also for these Member States, the obligation to
register the new legal forms (in case of PO1 and PO3) is likely to have non-significant costs.
To conclude that legislative changes would lead to the adjustment of existing, rather than the
creation of a completely new155
system. The IA study substantiates that policy options creating
a need to adapt registers (PO1 and PO3, and PO2 to a lesser extent) implies minor adjustments,
including adding a separate section or entry to the existing registers. Consequently, this is not
deemed to be particularly burdensome, since once this adjustment is implemented, the public
authority is expected to return to its business as usual. Hence, no significant additional annual
running costs can be expected.
In cases where registers need to be established (Ireland, Denmark and Sweden), converted or
a new “registration line” should be created in an existing register, it is anyhow recommendable
to promote digital registers, as a 2017 study shows that "e-procedures” could reduce costs by
yearly EUR 19 million for cross-border businesses and EUR 810 million for domestic
businesses. Moreover, research has shown that digital registration processes are less subject to
fraud because of harmonised safeguards on electronic identification. As shown by the Danish
conversion towards digital business registers: between 2011-2015 the average time for case
handling decreased by 69% and the average ramp-up time for a new employee decreased by
90%.156
To make an estimation of costs of online registration (assuming a register already exists), an
indication can be offered by the assessed costs for setting up an online registration possibility
for limited liability companies.157
For Member States the set-up costs for such an online
registration tool varied from EUR 42 000 in Ireland to EUR 100 000 in Poland, or around
154
That can be a specific register for associations.
155
In the event of a new register to be established, few data for the actual costs are available, as many organisation
of business registers were setup decades ago and evolved over time. Looking at comparable EU initiatives (in
terms of prescribed need to establish a register) can provide some perspective. (i) The impact assessment
accompanying the Proposal amending Directive (EU) 2015/849 estimates the costs for setting up a public registry
for national authorities to be limited (EUR 28 000 for IT/software setup, one-off cost). Hence, this datapoint might
present an underestimation of the true set-up costs as it is less numerous and expected to be less complex than for
associations.
156
European Commerce Registers' Forum report, 2017, p. 45 and 56, as referred to in the Commission SWD:
Impact Assessment - Proposal for a Directive of the European Parliament and of the Council amending Directive
(EU) 2017/1132 as regards the use of digital tools and processes in company law, p. 17.
157
It is to be noted that all MS already provide for electronic business registers since 2007 following a requirement
introduced into EU law at the time. Directive 2003/58/EC of the European Parliament and of the Council of 15
July 2003 amending Council Directive 68/151/EEC, as regards disclosure requirements in respect of certain types
of companies, OJ L 221, 4.9.2003, p. 13
54
EUR 120 000 in Latvia.158
For those policy options (PO1 and PO3) that concern setting up a
new legal form, the provision of the option of online registration would become compulsory,
while for harmonising minimum standards (PO2), it could be encouraged. In the short to
medium term, competent authorities may be required to invest in acquisition of such tools and
adjust processes including training of staff. Considering annual maintenance for digital
registries in Member States are found to be non-significant.159
Consequently, the European Commission may encourage or mandate interoperability of
national registers with an EU level platform/portal either to be established or building on
existing initiatives, such as the Single Digital Gateway to allow for automated data access and
exchange, and/or the use of agreed (minimum) standards to ensure comparability of data.
Besides the elements above, other (in)direct economic impacts for Member States can be
expected for all policy options:
• Increased service and product offer in the national markets as well as cooperation and
competition in critical sectors of high public relevance (e.g. healthcare and social services,
social work, work integration, training and education services, employment services and
research and development). This includes increased presence of service providers in public
markets as well as influx of specific know-how improving quality and capacity.
• Indirect Revenues: the reduced need for full establishment in all Member States where the
association is active, certainly for PO1 and PO3, is likely to have a negative impact on
direct revenues of authorities as overall less registrations will be needed (with
corresponding loss of fee income).160
However, such impacts are expected to have a low
magnitude (e.g. fees are largely used to compensate the administrative procedure and are
not considered as a revenue) and are likely to be offset by the increased indirect revenues
by new market players. While individual associations might be inclined to move their seat
for these reasons, interviews and the very nature of associations suggest that they are often-
times deeply rooted in their regional or national contexts.
Impacts on individual Member States are hard to predict as many factors play in the
decisions of individual associations where to establish (favourable local environment, cultural
links, and roots, ambitions of scale and roll out of operations). For ‘pan-European’ or
international associations, it might be argued that Member States hosting many International
or inter-governmental Institutions (e.g. France, Germany, Netherlands, Luxemburg, and
Belgium) will be more likely to become the main location for associations following the rules
proposed in the context of this initiative. Additional pull- and push factors might influence the
decisions of associations to optimise their basis of operations. Amongst others, these could be
158
Commission SWD: Impact Assessment - Proposal for a Directive of the European Parliament and of the
Council amending Directive (EU) 2017/1132 as regards the use of digital tools and processes in company law. A
DK government position paper addressed to the Danish Parliament regarding the same proposal estimates that
changes in the Danish Business Authority’s IT systems, are estimated at DKK 2 million (approx. EUR 270 000).
159
As indicated by a Danish Government position paper assessing the costs of maintenance for the Central
Business Register (CVR), estimating EUR 40 000 on annual basis in relation to implementing Directive
COM/2018/239.
160
This impact will favour potentially those Member States with international political institutions and well-
developed international communities.
55
economic (e.g. tax optimisation, market demands), legal, or political (e.g. to safeguard
activities against political pressure). The factors that might affect the decisions of associations
to maintain or move their seat are manifold and complex, which could lead to different results.
Therefore, it is not possible to judge the direction of these decisions and identify clear-cut
patterns or trends for different groups of Member States.161
Other elements are related to
neighbouring countries and border regions that might have more cross-border activity amongst
associations, for example those Member States that share the same language, host minority
populations of a neighbouring country or have traditionally strong cross-border civil society
ties.
To conclude, and considering the elements mentioned above, in the short-term162
non-
significant adaptation costs may occur for competent authorities. However, all POs are
expected to reduce in the long run recurrent costs for competent authorities related to
compliance and monitoring of cross-border activities and mobility of associations (such as for
the creation of legal personality, registration, merger, monitoring, informing associations and
establishment procedure costs). Significant extra costs are not expected for competent
authorities, as the volume of operations will be either similar to the already existing procedures
or even lighter as more simplified (and digitalised) procedures will be in place for cross-border
associations and overall, less registrations will be needed. As argued, predicting differences
between Member States is highly speculative, as many different direct and indirect factors are
at stake as well as very contextual elements in relation to cross-border relationships of
associations in neighbouring regions.
c. Potential economic benefits
To estimate to what extent each policy option can be expected to unlock the maximum
potential of 185 000163 associations, 75 000 jobs and 4.2 billion GDP164 contribution, an
“unlocking percentage” is estimated for each policy option, corresponding to the anticipated
uptake of the policy option over a 15-year time frame. This percentage is based on surveys,
161
IA study
162
Short term adaptation costs (one-off) are found to be as non-significant by the IA study. E.g. most Member
States have already have a (digital) register for associations or register associations in more generic registers (e.g.
NL) and have already acceptance and monitoring procedures in place that can be adapted with minimum costs.
DK, IE, and SE do not have a register for associations. In the case of DK associations are required to register in
the Central Business Register (CVR), which collects primary data on businesses in Denmark regardless of
economic and organizational structure, including associations under certain cases. In the case of SE, non-profit
associations are required to register in the Swedish Companies Register, if they conduct commercial business
activity, exceed certain thresholds in terms of number of employees, balance sheet total and net turnover.
163
See market context and problem definition Sections: After having estimated the theoretic maximum potential
(350 000), the maximum potential of policy intervention is the basis to calculate potential benefits under scenario
A (185 000).
164
The estimates for job creation and GDP are linked to the number of associations that would be unlocked due
to a given policy intervention. Job creation was then calculated assuming an equal employment need for new cross
border associations in comparison to the given ones. Constant estimates for currently operating cross border
associations are applied to the newly unlocked by the policy option (i.e. a constant FTEs/ (current) cross-border
association ratio was applied to the new ones).
56
expert interviews and legal analysis.165
Despite this approach, a potential overestimation cannot
be excluded, given the uncertainties of these unlocking percentages. To mitigate this risk, a 10
p.p. lower scenario was introduced (resulting in an A and B scenario of potential cross -border
associations, see also Section 2). A second element to anticipate uncertainty is the use of a
range with an upper and lower bound for each potential benefit (- 5p.p and + 5 p.p. to the central
estimate per policy option, resulting in ranges of potential benefits.166
SCENARIO A
Table 8: Estimated economic benefits regarding the unlocking potential of cross-border activity of associations167
Estimated benefits
Scenario A
Estimated PO /
scenario
Additional n. of
cross- border
associations
Additional
annual GDP in
EUR billions
Additional
employment
70% - 80% policy
uptake
PO1 & PO2 =
central estimate
75%
130 000
149 000
2.9
3.4
53 000
60 000
85% - 95% policy
uptake
PO3 = central
estimate 90%
157 000
176 000
3.57
4
64 000
71 000
Maximum potential
of policy
intervention
100% 185 000 4.2 75 000
A second scenario is added mitigating a possible overestimation of the maximum potential
explained above. This is based on 155 000 associations as maximum unlocked potential by
policy intervention (10 p.p. lower scenario168
as regards scenario A see also Section 2) and
gives the following range of potential benefits.
SCENARIO B
Table 9: Estimated economic benefits regarding the unlocking potential of cross-border activity of associations.
165
Responses from the IA study survey are used as a starting base, which then were validated in the IA study with
responses of in-depth interviews and the legal analysis and translated into percentages. More detail on the
justification of the percentages is included in the methodological Annex 4 (Section 4.4).
166
Figures for both scenarios A and B based on a policy uptake range corresponding to a 5p.p. margin to the
central estimate (75% for PO1 and PO2 and 90% for PO3) as suggested by the IA study. Central estimate based
on targeted survey and in-depth interviews, as well as legal analysis.
167
See annex 4 (Section 3.2) for more details.
168
Scenario B corresponds to 50% of current cross border associations (310 000) instead of 60% (scenario A).
See also Annex 4 (Section 2.5) for details.
57
Estimated benefits
Scenario B
Estimated PO /
scenario
Additional n. of
cross- border
associations
Additional
annual GDP in
EUR billions
Additional
employment
70% - 80% policy
uptake
PO1 & PO2 =
central estimate
75%
108 000
124 000
2.4
2.8
44 000
50 000
85% - 95% policy
uptake
PO3 = central
estimate 90%
132 000
147 000
3
3.3
54 000
60 000
Maximum potential
of policy
intervention
100% 155 000 3.5 63 000
d. Environmental-, climate- and social impacts and fundamental rights
In the context of this IA, the difficulty generally emerged to determine a causal relationship
between an EU intervention aiming at simplifying regulatory and administrative rules on cross-
border operations of associations, on the one hand, and the potential environmental,
fundamental rights and social impacts, on the other hand. It can, anyway, be assumed that an
EU intervention under the three policy options will trigger indirect and non-measurable
positive effects.169
Environmental and climate impact
In principle, the nature and objectives of the initiative are not expected to generate measurable
direct environmental and or climate impacts.
When looking at the potential indirect benefits, all policy options are expected to generate a
positive impact by improving the position and presence of cross-border associations active in
the environmental and climate change sphere170
, such as promotion of biodiversity, nature
preservation and the fight against climate change.
Social impact
169
For example, by simplifying the creation of cross border alliances and partnerships between organisations,
mobilising volunteers, improving the representation at EU level and having a more efficient outreach in Member
States.
170
E.g. on climate, quality of natural resources (water, soil, air etc.), biodiversity (including flora, fauna,
ecosystems, and landscapes), animal welfare, sustainable consumption and production, efficient use of resources,
etc.
58
Similar potential benefits will occur for all POs in terms of social impacts. More precisely by
improving the access for citizens in sectors offering social services across Member States (e.g.
health, care and -services, community service social work, education and training, employment
services, etc.). Consequently, this impact will foster convergence between the different models
and offers in the Member States, including mainstreaming of innovation, leading to an overall
enhanced quality and offer of such services in the EU. Given the strong presence of associations
in areas described above, PO2 is expected to foster positively the access to those services
offered by smaller organisations which, for instance, could be offered without the need for
establishment. Finally, all POs are expected to foster participatory and citizen oriented civic
space (e.g. participation in civil society, sports, arts and culture) potentially being interlinked
across borders.
Looking at different options, PO1 (and to certain extent PO3) would be likely to benefit
associations with an explicit social impact mission and organised at EU level with action in all
(or multiple) Member States (e.g. social enterprises, social service providers, health, care and
household service, social protection and rights). In this sense, PO1 and PO3 would strengthen
the right to freedom of assembly and association in a non-discriminatory manner, as
associations using the new legal forms would be treated in an equal manner with associations
that already exist under national laws, albeit by automatic recognition under PO1 as opposed
to mutual recognition in PO3. Still, at Member State level, limitations to the type of activities
performed by the associations may occur when the association is not established. For example,
in case such activities may be subject to specific national legislation (e.g. labour law, social
security, taxation rules, etc.) implicitly requiring establishment.
Fundamental rights
Although this initiative is centred on the functioning of the single market for non-profit
associations, all POs would have an indirect positive effect on the protection and promotion of
fundamental rights. For instance, by improving the conditions for associations to operate in the
single market, they will strengthen the enjoyment of the right to freedom of expression and
information (Article 11 of the Charter) and right to freedom of peaceful assembly and to
association (Article 12 of the Charter) in the EU.
From this viewpoint, all POs would indirectly strengthen the civil society and mitigate the
overall shrinking civic space trends observed in Europe,171
by facilitating cross-border
activities and mobility of associations and enabling them to mobilise members, volunteers and
interest groups across different Member States. The options would ultimately have an indirect
positive impact on the EU democratic space.172
When it comes to fundamental rights impacts of the different policy options, it has to be noted
that creating a new legal form at EU level (i.e. PO1 sub-options), according to desk research
171
As observed by the reports/opinions by the Council of Europe (Resolution 2226 (2018). New restrictions on
NGO activities in Council of Europe member States of 27 June 2018), European Parliament (2021/2103 INI
resolution on the shrinking space for civil society in Europe of 8 March 2022), European Commission
(COM(2022) 716. “A thriving civic space for upholding fundamental rights in the EU 2022. Annual Report on
the Application of the EU Charter of Fundamental Rights of 6.12.2022)
172
Democracy Index 2021: less than half the world lives in a democracy
59
and Public Consultation results173
, is considered as a strong contribution to the Europeanisation
of the civic space.174
The effects of PO2 are not expected to be as pronounced as those of PO1
and PO3, as it would only harmonise certain national rules (listed in Section 5). Similarly to
PO1, PO3 would be expected to have a strong positive - although indirect - impact in terms of
safeguarding the fundamental right to freedom of assembly and association and right to
freedom of expression and information of associations and their members. It will in fact allow
associations with cross-border ambitions to effectively expand and conduct their activities in
other Member States, thereby also contributing to the exercise of fundamental rights that they
advance through their activities, by benefitting from a uniform and sufficiently complete legal
framework which, differently from PO1 sub-options, would not neglect the national
specificities. The new rules would however not be applicable to pre-existing associations,
unless they convert to the new form, which would create minor negative effects from the
perspective of equality among associations.
PO2 and PO3 might not as directly favour a “European brand” through a “European legal form”
(in comparison with PO1), however they would still simplify procedures in the single market
by reducing administrative burden and costs for cross-border associations, indirectly
benefitting those associations active in the area of fundamental rights at pan European scale.
Taking into account the objectives and scope of the initiative, the specific and significant
impacts per policy option are described as follows:
6.1 PO1a and PO1b: Establish an EU-level legal form of association: ‘the European
Association’ (PO1a)” or ‘The European cross-border Association’ (PO1b)
This section will first discuss the impacts that are equal for both PO1a and PO1b, as outlined
in Section 5. Consequently, when “PO1” is used this refers to both sub-options, unless stated
otherwise. Under Section 6.1.4 only specific impacts for PO1b will be discussed.
Overall, PO1 would introduce a supranational legal form of association facilitating operations
across borders that would co-exist with other legal forms in the Member States. Once a
European Association would be established and registered, it would be automatically
recognised in all Member States, and it should be treated the same as associations incorporated
under their national laws (principle of non-discrimination). Associations not using the new
legal form remain unaffected.
The legal instrument for both PO1a and PO1b would be a regulation. It is the only legal
instrument available for creating a new legal form at EU level, as confirmed by the CJEU. The
benefit of this instrument is legal clarity resulting from its direct applicability and uniformity
in content across the Union. However, creating a new legal form in this way may generate
unwanted effects, not be entirely proportionate to the scale and nature of the identified
problems, , given that Member States would not able to adapt the requirements to their national
173
Among the respondents’ preferred choice of the envisaged policy options 36% (22 out of 64) of respondents
indicated that their preferred policy option would be a new legal form for associations.
174
It would “provide the most democratic and citizen-powered kind of association”.
60
settings and tradition. At the outset, the said unfamiliarity could involve adjustment costs and
may raise the threshold to take up this form.
The consequence (and downside) is that PO1 requires from already established associations
wishing to benefit to take the new legal entity, with all related administrative implications and
cost. The creation of a new legal form has, therefore, uncertainty of uptake and might create
potential confusion for stakeholders as more legal forms will exist in parallel. Furthermore, it
can create ‘competition’ between existing legal forms for associations in the Member States
and the new legal form prescribed and regulated by EU law.
6.1.1 Economic impacts on associations
The overall impact on the costs of cross-border operations is expected to be significant,
allowing associations active cross-border to substantially reduce their cost of compliance and
administrative burden. Moreover, it is expected that the reduced barriers to entry will unlock a
significant share of associations interested in operating cross-border. In particular:
1. Associations already active cross-border: when transforming to the new legal form,
substantial simplification in terms of compliance cost and administrative burden can be
expected in terms of running cost of operating cross-border;
2. Associations interested in launching cross-border operations, but hesitating due to
existing barriers: in addition to the significantly reduced cost of operating cross-border
also the need for establishment and the activities to be undertaken to act cross-border
for those making use of the new legal form will be significantly reduced;
3. Associations not interested in launching cross-border operations: this policy option
does not affect such associations as they are not obliged to transform.
This would be particularly beneficial for associations whose scope extends over the territory
of several or all Member States. The voluntary nature of using the EU legal forms (PO1a and
PO1b) means that it would not impose any additional compliance costs on associations that do
not want to obtain them.
Costs of operating cross-border (recurring) for associations active cross borders (310
000): PO1 has the potential to significantly reduce costs for associations using the EU legal
form and thus simplifying gathering information, less internal staff working on compliance and
less needs for regular external advisory support. The extent to which such benefits materialise
depends, however, on the extent of uptake of the new legal forms (PO1a or PO1b). As a
potential cost reduction, the IA study estimates an order of magnitude leading to up to
EUR 770 million per year (for the assessed timeframe of 15 years), see Annex 4 for
calculations).175
175
This cost reduction is not applicable to those associations not acting across borders or without the ambition to
develop such initiatives in future. The basis for calculations are those associations estimated to be already active
cross borders (310 000). For detailed calculations see annex 4 (Section 2.5). The main source of information for
the assessment of the operation costs was primary data collection, via the targeted survey and in-depth interviews,
which also focused on costs assessment. Costs were also assessed against available secondary data (IA study).
However, it is not likely to expect such effect to materialise from year one. We can assume a lag effect of one
61
Table 10: Excess cost reduction per year (for the assessed timeframe of 15 years).
Max cost reduction per year for PO1 (relative to the baseline)
Information cost (internal staff) ~EUR 350 million
Compliance cost (internal staff) ~EUR 190 million
Direct cost / External advisory cost (External
running cost)
~EUR 230 million
As additional impacts, for future cross-border operations of associations (associations not yet
active cross-border but potentially interested to do so, if barriers are removed), the launch cost
is estimated at EUR 3 500, which is a cost reduction of EUR 2 150 per launch176, compared
to the baseline of EUR 5 650 (for detailed overview see Annex 4). 177
Within the assessed 15-
year time frame, this excess cost reduction could potentially range between EUR 278 million
and EUR 318 million, in case of scenario A, and between EUR 233 million and EUR 267
million, in case of scenario B178
(for detailed information about the two scenarios see
introduction section 6).
6.1.2 Indirect economic effects
Given the fact that both legal forms under PO1 are expected to significantly lower the barrier
for cross-border associations active in multiple Member States, it is expected that particularly
large associations will make use of the European legal forms. The extent to which it trickles
down to smaller associations will depend on the complexity of transforming a national legal
form into one of the two legal forms under PO1 prescribed fully or partially by EU law.
As described in tables 7 and 8, for this PO1 estimated benefits range as follows: number of
additional cross-border associations between 130 000 – 149 000 for scenario A and 108 000 –
124 000 for scenario B; additional GDP between EUR 2.9 billion - EUR 3.4 billion for scenario
A and EUR 2.4 - EUR 2.8 billion for scenario B; and additional employment GDP between
year where no effects can be observed, due to the time to effectively implement the appropriate policy intervention
and produce the desired effects on relevant stakeholders (e.g. stakeholders to familiarise with new legislation).
Therefore, starting from year one, we can expect a linear increase from the current situation to the full cost
reduction potential (i.e. EUR 770 million per year) until year five. As of year five, we can expect the policy
intervention to be fully effective and to produce the maximum expected results.
176
IA study. Estimates based on association responses to the targeted survey and in-depth interviews.
Internal setup cost (compliance cost): EUR 1 500 and external advisory cost (direct cost): EUR 650
177
In case the legal form allows associations to operate in other Member States (without establishment) this saved
costs would be multipliable by the amount of Member States where a registration had to be done under the baseline
scenario.
178
Applying this excess cost estimate (2 150) to the estimate range (considering both scenario A and scenario B)
of new associations that are expected to launch cross-border given this policy option.
62
53 000 – 60 000 for scenario A and 44 000 – 50 000 for scenario B.179
In terms of the speed
of uptake, an exponential growth rate can be expected with some associations being ‘early
birds’ and others hesitating and waiting to see the ‘proof of concept’. Another element which
will play a role in the uptake depends greatly on what type of activities will be deployed. For
example, in case local staff would be hired or in case non-tax exempt services are offered (of
an otherwise need for a local presence), the need for registration or establishment in some form
will at least partially remain.180
A counter example is, when services are offered in a digital
context, it is likely that registration in each Member State will not be needed and this PO1
could have a very positive effect.
6.1.3 Impacts on Member States
As explained in the first past of this Section, the magnitude of the cost for all policy options is
not expected to constitute a significant cost for competent authorities at Member State level.
This Section will, however, provide a short overview of different costs and benefits for PO1.
Information costs: the EU and/or competent authorities will likely need to set up awareness-
raising activities to make the new legal form better known among associations.
Adjustment costs (monitoring and supervision): the creation of an additional form at EU level
can increase the complexity for authorities’ monitoring and supervision, as different regimes
will exist next to each other. However, as assessed in the introduction of Section 6, it is
expected that this should be a low one-off investment. In the medium and long term, depending
on the uptake of the legal form, PO1 will require minimal additional costs related to mainly
legal and administrative monitoring and supervision of the newly established associations
under the EU legal form (e.g. the registration and establishment procedures, fiscal
declarations). Differences might occur between Member States, e.g. those Member States
(mainly Belgium, France, Luxembourg, Netherlands, and Germany)181
with many international
institutions might have a better uptake compared to others.
Adjustment costs (registration): an EU legal form would require the creation of a framework
for registration in the Member States. Please note that impacts relating to the creation or
adaptation of national (online) registers under all options are presented in the first part of
Section 6.
6.1.4 Stakeholders’ views on policy option 1
PO1 would be particularly favoured by associations established in more than one Member
States or with activities at a pan- European level (multiple Member States). In terms of its
179
Figures for both scenario’s A and B based on a policy uptake range between 85% and 95%. This range
corresponds to a central estimate 75% uptake of the policy intervention as suggested by the IA study based on
targeted survey and in-depth interviews, as well as legal analysis.
180
Although in most countries employers are obliged to register in that country for tax purposes when hiring
employees, it is not always required to establish a legal entity. There are, however, quite a few countries where
no separate legal entity is to be established for the purpose of hiring employees, but a branch office is to be opened
instead. International Employment Law Guide (deloitte.com).
181
Study_StatuteforEuropeancross-borderassociationsandnon-profitorganisations_EN.pdf (europa.eu).
63
effectiveness in facilitating associations establishing operations in another Member State, this
policy option was ranked the highest in the targeted survey conducted for the IA study (on
average 4 out of 5).182
Results from the Public Consultation show that 36% (22 out of 64) of
respondents indicated that their preferred policy option would be a new legal form for associations.
Among the 38 respondents who defined themselves under the legal form of association, 42%
(16 out of 38) favoured “a new legal form for associations”.
6.1.5 Specific impacts related to Policy option 1b: EU level legal form covering cross-border
aspects: ‘The European cross-border Association’
The technique of creating a legal form at EU level by partially prescribing applicable rules and
otherwise relying on Member State law has both advantages and disadvantages. In that sense,
this sub-option represents a limited variation of PO1a, prescribing at EU level only cross-
border aspects and main features of the new legal form to the extent needed for coherence.
Otherwise, it would refer to existing Member State law.183
Just like PO1a, this sub-option
would be directly applicable without transposition. Therefore, it would be uniform in content
across the Union regarding the elements it prescribes. Implementation would require Member
States to make necessary provisions to ensure effective application (for example, in cases
where they lack relevant provisions in national law) and designating a competent authority.
Like for PO1a, the legal instrument would be a regulation, with similar benefits as described
for PO1a with regard to its uniform application and the additional benefit that the scope would
be smaller (limited to cross-border aspects), meaning that this sub-option responds better to
the criteria of subsidiarity and proportionality, compared to PO1a. Compared to PO3, PO1b
would likely be roughly equally effective, efficient, and coherent. However, due to the choice
of legal instrument and the introduction of the new legal form at EU level, PO1b would be
slightly less proportionate, given that it does not allow Member States to adapt the legal form
to their national specificities through transposition. Moreover, its impact in terms of legal
clarity is not straightforward.. Stakeholder feedback shows that this technique adds complexity
for those using such legal form created at EU level and may have a negative effect on uptake,
as shown in the input to consultations concerning the evaluation of the European Cooperative
Society..
While this sub-option is more targeted and proportionate compared to PO1a, it can be expected
to have similar effects as the broader PO1a regarding the key cost-benefit indicators of cross-
border operation.
Consequently, the impact on operating costs for individual associations is expected to be
similar to PO1a and PO3 (as this IA makes the theoretical assumption that PO1 and PO3 have
similar impacts in terms of operating costs for associations).
182
IA study.
183
Inspiration regarding the level of detail and material scope could be taken from the regulatory approach of the
European Cooperative Society, but stretched in a way that references to Member State law cover major elements
and provisions prescribed at EU level cover only what is essential for cross-border purposes.
64
When it comes to the launch cost, the excess cost reduction per launch could also be assumed
to be similar as for PO1a and PO3 (EUR 2 150). However, there is more uncertainty as regards
the overall total impacts, as this depends on the potential uptake of both policy options.
Assuming that the estimated potential uptake is higher for PO3 than for PO1, PO1.b would
result in a lower total estimated excess cost reduction for launching operations over a 15-year
time frame compared to PO3.
It should be noted that, given the similarities in how PO1b and PO3 address the cross-border
barriers in terms of scope and magnitude (given that PO1b and PO3 essentially regulate the
same cross-border aspects), it is plausible to assume that the uptake for PO1b might reach
similar levels and thus approach potentially the uptake of PO3, which would be higher than for
PO1.a. Consequently, this would result in higher reduction of excess launch cost for PO1b,
compared to PO1a, and similar launch cost to PO3. However, as the targeted stakeholder
consultation for this IA did not include a specific question for PO1b to test this plausibility,
this IA will hold the most prudent approach which assumes a similar policy uptake (and the
excess cost reduction of launch costs) of PO1b and PO1a. The same reasoning could be made
for potential benefits in terms of GDP and job creation. Another element defending the more
conservative approach is that PO1b does not provide harmonisation for the more ‘occasional’
cross border activities and therefore will not be equally effective.
The expected result is that particularly larger associations eager to operate at international level
will make use and benefit from such a new legal form, similarly to PO1a. As argued before,
PO1b has a more proportionate character than PO1a, but still remains an EU legal form. The
extent to which these benefits will trickle down to smaller associations will depend on the
complexity and cost of converting into such a legal form, or, for newly established associations,
the extent to which this is more complex than using national legal forms. Stakeholder feedback
on comparable precedents shows that this kind of technique adds complexity for those using
such legal form, given that it requires relying on an EU Regulation in part and on national law
otherwise, which may have a negative effect on uptake.184
Hence, in summary, due to lack of
specific evidence that would point otherwise, and the assumed similarity in the uptake potential
between PO1a and PO1b, the long-term estimated impacts of PO1b are not likely to differ from
PO1a.
Considering impacts on Member States, they are largely the same as under PO1a: limited costs
can be expected arising from the need to introduce a new legal form and allow for registration
and monitoring of this legal form. In this sub-option, such cost should however be somewhat
lower than in PO1a, given its scope limited to cross-border aspects requiring adaptation and
information costs of small scale. Differences arise concerning the elements that are not
prescribed at EU level, but which rather refer to Member State law concerning comparable
entities. Some Member States might still need to create some additional legislation for these
elements, given that not all Member States currently comprehensively regulate on association
law.
184
As shown by consultations concerning the evaluation of the European Cooperative Society.
65
6.1 PO2: Harmonisation regarding common minimum standards for cross-border
activities of associations
As PO2 would harmonise national association laws (see Section 5.2.2 for an overview of
standards identified to be subject of the harmonisation), it would have the main advantage
(unlike PO1 and PO3) of not requiring setting up a new legal form for cross-border operations.
It would address barriers by setting common minimum standards for cross border aspects.
The legal instrument would be a directive. The benefit of this legal instrument is that it allows
for adapting the prescribed rules to national settings, which may also facilitate uptake and
reduce adjustment costs, given the general lack of resources associations are facing. This is
also very much compliant with the principle of subsidiarity. The downside concerns the risk of
fragmentation resulting from divergent application among the Member States, as well as
administrative burden for the Member States, as a result of the transposition process. This may
be mitigated through the overall level of precision of the proposed instrument, which may
promote legal clarity regarding the prescribed rules and their application . Given the intended
content, it is likely that a directive is the only available legal instrument for this policy option.
The most significant impact of PO2 would stem from a partial harmonisation leading to
simplification of recurring activities for associations (e.g. gathering information, compliance
and need for regular external advisory support in cross-border contexts, such as registrations).
Consequently, PO2 would impact all associations to the extent that the new requirements differ
from the current national settings (baseline scenario).
Yet, the impact on associations not interested in operating cross-border is expected to be non-
significant, as the changed requirements are in principle only tackling elements relevant for
cross-border activities, given the targeted scope of harmonisation under this option.
For associations operating cross border, PO2 would lift the identified obstacles that they face
when operating across borders and would allow for a mechanism for mutual recognition of
legal personalities. Harmonisation would not address taxation or labour law and in this respect,
barriers will essentially remain. Also, administrative burden will not entirely be prevented. For
example, specific registration requirements could still exist for associations that want to operate
cross-border (e.g. linked to national requirements concerning taxation, employment), but they
should serve justified purposes and be reasonable in terms of burden.
At the level of the Member States, PO2 would directly generate impacts in terms of adaptation
(e.g. they would be required to take specific action by making the relevant amendments to their
national laws). Harmonisation may imply removing or adjusting existing provisions or
introducing provisions that are absent. Only a few Member States already have provisions or a
separate legal form for cross-border associations, while most do not have established provisions
tackling cross-border aspects, as mentioned in previous Sections of the IA.
6.2.1 Economic impacts on associations
Under PO2, the direct economic costs of cross-border operations are expected to be
significantly reduced compared to the baseline. In particular:
66
1. Associations already active cross-border: harmonisation of rules in the single market
leading to substantial simplification in terms of compliance cost and administrative
burden for the running cost of operating cross-border;
2. Associations interested in launching cross-border operations but hesitating due to
existing barriers: barriers to entry are significantly reduced thanks to harmonisation of
rules in the single market. No need to convert into a new legal form. Particularly
beneficial for small associations or those aiming to occasionally work across borders
as no costs of converting into a new legal form;
3. Associations not interested in launching cross-border operations: may be affected by
the adaptation of national rules on associations, depending on the transposition of the
legal instrument by the Member States.
Costs of operating cross-border (recurring) for associations already active cross-border
(310 000): PO2 has the potential to significantly reduce excess costs of operation compared to
the baseline due to its harmonisation effect and thus simplifying gathering information, less
internal staff working on compliance and less needs for regular external advisory support. The
potential cost reduction is estimated at an order of magnitude of up to EUR 465 million per
year (for the assessed timeframe of 15 years), see Annex 4 for calculations).185
.
Table 11: Excess cost reduction per year (for the assessed timeframe of 15 years).
Max cost reduction per year for PO2
Information cost (internal staff) ~EUR 210 million
Compliance cost (internal staff) ~EUR 115 million
Direct cost/External advisory cost
(External running cost)
~EUR 140 million
It should be stressed that this cost reduction is not applicable to associations not acting across
borders or without the ambition to develop such operations.
For future cross-border operations of associations, the launch cost is estimated at EUR 3 800
which is a cost reduction of EUR 1 850 per launch186
, compared to the baseline of EUR 5 650
185
This cost reduction is not applicable to those associations not acting across borders or without the ambition to
develop such initiatives in future. The basis for calculations are those associations estimated to be already active
cross borders (310 000). For detailed calculations see Annex 4 (Section 2.5). The main source of information for
the assessment of the operation costs was primary data collection, via the targeted survey and in-depth interviews,
which also focused on costs assessment. Costs were also assessed against available secondary data (IA study).
However, it is not likely to expect such effect to materialise from year one. We can assume a lag effect of one
year where no effects can be observed, due to the time to effectively implement the appropriate policy intervention
and produce the desired effects on relevant stakeholders (e.g. delay of uptake that can be expected due to the
transposition timeframe of the Directive). Therefore, starting from year one, we can expect a linear increase from
the current situation to the full cost reduction potential (i.e. EUR 465 million per year) until year five. As of year
five, we can expect the policy intervention to be fully effective and to produce the maximum expected results.
186
IA study. Estimates based on association responses to the targeted survey and in-depth interviews.
Internal setup cost (compliance cost): EUR 1 200 and external advisory cost (direct cost): EUR 650.
67
(for detailed overview see Annex 4).187
Within the assessed 15-year time frame, this excess
cost reduction could potentially range between EUR 240 million and EUR 274 million, in case
of scenario A and between EUR 201 million and EUR 229 million, in case of scenario B.188
6.2.2 Indirect economic effects
PO2 is expected to significantly lower the barrier to launch cross-border operations as it would
benefit also associations that only occasionally are interested in cross-border activities. This
could be often smaller associations (small number of paid employees or budget), which account
for by far the largest share of associations overall.
As described in tables 7 and 8, for this PO2, the estimated number of additional cross-border
associations range between 130 000 – 149 000 for scenario A and 108 000 – 124 000 for
scenario B, additional GDP range between EUR 2.9 billion – EUR 3.4 billion for scenario A
and EUR 2.4 billion – EUR 2.8 billion for scenario B and additional employment GDP range
between 53 000 – 60 000 for scenario A and 44 000 – 50 000 for scenario B.189
6.2.3 Impacts on Member States
In general, PO2 is expected to have the strongest impact on Member States as it would require
adaptation of the national rules on associations. This said, and as illustrated in the first part of
this Section, the magnitude of the cost is not such that it constitutes a significant cost for
competent authorities at Member State level.190
This section will, however, provide a short overview of different costs and benefits.
Information costs: all associations with or without cross-border activities will need to be
informed about changes in the legislation and subsequent compliance. Differences between
Member States will greatly depend on the degree to which existing legislation should be
adapted to guarantee a homogeneous way of introducing the new provisions in the respective
legal systems of Member States (for example when introducing new rules on cross-border
aspects or amending existing one, when there is not yet a register, or the registration processes
needs to be fully or partially adapted). The information “weight” (complexity of changes) is
expected to be relatively higher than for PO1 and PO3 as it would imply informing all
associations about changes made in the national framework for associations, despite the
targeted elements of compliance (those harmonised) of potential interest for those associations
with cross-border needs.
187
In case the legal form allows associations to operate in other Member States (without establishment) this saved
costs would be multipliable by the amount of Member States where a registration had to be done under the baseline
scenario.
188
Applying this cost estimate to the estimate range (considering both scenario A and scenario B) of new
associations that are expected to launch cross-border given this policy option.
189
Figures for both scenarios A and B based on a policy uptake range between 85% and 95%. This range
corresponds to a central estimate 75% uptake of the policy intervention as suggested by the IA study based on
targeted survey and in-depth interviews, as well as legal analysis.
190
IA study.
68
Adjustment costs (monitoring and supervision): PO2 will impact competent authorities as
adjustment costs related to monitoring and supervision framework are to be expected in this
respect, given that new procedures concerning mutual recognition may be established. This, in
turn, may give rise to an increased number of associations to monitor and supervise. On the
other hand, with improved possibilities to recognise the legal personality for cross-border
associations, therefore less procedures in terms of full establishment (setting up new legal
entities or establishing branches) will need to be managed by the supervising authority in the
long run (less costs).
Adjustment costs (registration): in the short term, considering adjustment costs for authorities
related to the registration of associations, PO2 will require the adaptation of current registers
(or for those without a register: create a register or adapt another existing register) to the
common standards allowing recognition and equal treatment across borders.191
Please note that
impacts relating to the creation or adaptation of national online registers under all options are
presented in the first part of the section 6.
6.2.4 Stakeholders’ views on policy option 2
In terms of its effectiveness in facilitating associations to establish operations in another
Member State, this policy option received on average a score of 3.4 of 5 in the targeted survey.
Results from the Public Consultation show that 32% (12 out of 38) of the respondents who
identified themselves under the legal form of associations chose ‘harmonisation of some
common minimum standards’ as their preferred policy option. And 42% (26 out of 64) of all
of respondents to the Public Consultation indicated as preferred option the harmonisation of
common minimum standards for cross-border operations in the EU.
6.3 PO3: Creation of an additional national legal form of association designed for a
cross-border membership and/or cross-border purposes or activities
This policy option would require Member States to introduce in their legal systems a legal form
for associations specifically designed for cross-border membership and/or for cross-border
activities and/or purposes (‘cross-order association’). PO3 would be based on limited
provisions essential to cross-border activities and based on mutual recognition among Member
States (see Section 5.3.3), while respecting varying national traditions in association law (as it
leaves existing legislation in the Member States untouched). It offers a combination of PO1
and PO2, in that it creates an additional new legal form of association (similar to PO1), but
with provisions relevant to cross-border aspects, which Member States may adapt to their
respective national setting through transposition (similar to PO2), but without amending rules
on existing legal forms on associations in the Member States.
The legal instrument would be a directive. The benefit of this legal instrument is that it allows
for adapting the prescribed rules to national settings, which may also facilitate uptake and
reduce adjustment costs, given the general lack of resources associations are facing. This is
also very much compliant with the principle of subsidiarity. The downside concerns the
191
Those Member States without a register (such as Ireland, Denmark and Sweden), will need to establish one to
allow the mutual recognition or integrate it in existing registers (see also cost estimates in the intro of this Section).
69
possible risk of fragmentation resulting from divergent interpretation among the Member
States, as well as administrative burden for Member States, as a result of the transposition
process. This may be mitigated through the overall level of precision of the proposed
instrument, which may promote legal clarity with regard to prescribed rules and their
application. Given the intended content and appropriate legal basis, it is likely that a directive
is the only available legal instrument for this policy option.
Under PO3, no full streamlining of all administrative procedures for (cross-border and national)
associations will be achieved, as PO3 does not touch existing legislation. Finally, the creation
of an additional legal form (as for PO1) could create ‘competition’ between existing legal forms
for associations in the Member States and this new legal form may lead to a sort of ‘jurisdiction
shopping’ by the associations wishing to take up the new legal form. It is important to note that
PO3 will not affect associations that do not want to operate across borders.
6.3.1 Economic impacts on associations
Under PO3, the direct economic costs of cross-border operations are expected to be
significantly reduced compared to the baseline. In particular:
1. Associations already active cross-border: if converting to the new legal form at
national level, substantial simplification in terms of compliance cost and
administrative burden can be expected.
2. Associations interested in launching cross-border operations, but hesitating due to
existing barriers: if converting to the new legal form at national level, significantly
reduced costs thanks to the recognition of new legal form among Member States, legal
certainty and reduced red tape;
3. Associations not interested in launching cross-border operations: this policy option
does not affect these associations as they are not obliged to transform.
Consequently, the compliance and administrative burden will decrease. This is particularly
relevant for associations active in multiple or all Member States, though they would first have
to invest in their conversion to the new form to benefit (similar to PO1).
Costs of operating cross-border (recurring) for associations active across borders (310
000): PO3 has the potential to reduce costs of operation particularly for associations operating
in multiple Member States, due to its harmonisation effect and simplification in terms of
gathering information, internal staff working on compliance and needs for regular external
advisory support. The extent to which such benefits materialise depends, however, largely on
the extent of uptake of the new legal form. The potential cost reduction is estimated at an order
of magnitude of up to 770 million per year (for the assessed timeframe of 15 years), see
Annex 4 for calculations.192
192
This cost reduction is not applicable to those associations not acting across borders or without the ambition to
develop such initiatives in future. The basis for calculations are those associations estimated to be already active
cross borders (310 000). For detailed calculations see Annex 4 (Section 2.5). The main source of information for
the assessment of the operation costs was primary data collection, via the targeted survey and in-depth interviews,
which also focused on costs assessment. Costs were also assessed against available secondary data (IA study).
70
Table 12: Excess cost reduction per year (for the assessed timeframe of 15 years).
Max cost reduction per year for PO3
Information cost (internal staff) ~EUR 350 million
Compliance cost (internal staff) ~EUR 190 million
Direct cost/External advisory cost (External
running cost)
~EUR 230 million
This cost reduction is not applicable to associations not acting across borders or without the
ambition to develop such initiatives in the future.
For future cross-border operations of associations, the launch cost is estimated at EUR 3 500
which is a cost reduction of EUR 2 150193 per launch compared to the baseline of EUR 5 650
(for detailed overview see Annex 4).194
Within the assessed 15-year time frame, this excess
cost reduction could potentially range between EUR 338 million and EUR 378 million, in case
of scenario A,195
and between EUR 283 million and EUR 317 million, in case of scenario B.196
6.3.2 Indirect economic impacts
PO3 is expected to significantly lower the barrier to launch cross-border operations for
associations that aim to establish in more than one Member States, but also for those that work
and act in border regions and may more occasionally operate cross border. The extent to which
associations interested in cross-border activities can be reached will lie on their capability of
transforming to the new legal form. However, it is important to note that, for PO3, the
effectiveness greatly depends on the harmonisation effect (see Section 5.2.3) and thus, on the
extent that barriers do not remain in areas that are not covered by this policy option.
As described in tables 7 and 8, estimated benefits in terms of number of additional cross-border
associations range between 157 000 – 176 000 for scenario A and 132 000 -147 000 for
scenario B, additional GDP range between EUR 3.57 billion – EUR 4 billion for scenario A
and EUR 3 billion – EUR 3.3 billion for scenario B and additional employment range between
However, it is not likely to expect such effect to materialise from year one. We can assume a lag effect of one
year where no effects can be observed, due to the time to effectively implement the appropriate policy intervention
and produce the desired effects on relevant stakeholders (e.g. introduction into national law). Therefore, starting
from year one, we can expect a linear increase from the current situation to the full cost reduction potential (i.e.
EUR 770 million per year) until year five. As of year five, we can expect the policy intervention to be fully
effective and to produce the maximum expected results.
193
IA study. Estimates based on association responses to the targeted survey and in-depth interviews.
Internal setup cost (compliance cost): EUR 1 500 and external advisory cost (direct cost): EUR 650.
194
In case the legal form allows associations to operate in other Member States (without establishment) this saved
costs would be multipliable by the amount of Member States where a registration had to be done under the baseline
scenario.
195
With a central value for this range of EUR 358 million.
196
Applying this cost estimate to the estimate range (considering both scenario A and scenario B) of new
associations that are expected to launch cross-border given this policy option.
71
64 000 – 71 000 for scenario A and 54 000 – 60 000 for scenario B.197
In terms of the speed
of uptake an exponential growth rate can be expected with some associations being ‘early birds’
and other hesitating and waiting to see the ‘proof of concept’.
6.3.3 Impacts on Member States
In general, and as illustrated in the first past of the Section, under PO3 the magnitude of the
cost is not such that it would not constitute a significant cost for competent authorities at
Member State level.
This section will, however, provide a short overview of different costs and benefits.
Information costs: associations would not be familiar with this new legal form. Member States
will need to set up awareness-raising activities to make the new legal form created at national
level better known. Information costs are expected to be similar to PO1 and less impactful than
PO2 as the creation of the new legal form is of interest to associations with cross-border
activities and ambitions.
Adjustment costs (monitoring and supervision): will be equal as described in PO1.
Adjustment costs (registration): in the short term, considering adjustment costs for authorities
related to the registration of associations under the new legal form, PO3 would require the
adaptation of current registers or setting up a new register, in line with the newly created
common standards allowing for recognition and equal treatment of the new legal form across
borders. Please note that impacts relating to the creation or adaptation of national registers
under all options are presented in the first part of the Section.
6.3.4 Stakeholders’ views on policy option 3
In terms of effectiveness in facilitating associations to establish operations in another Member
State, this policy option received on average a score of 3.2 out of 5 in the targeted survey.
Results from the Public Consultation indicate that the most favoured policy option by
associations is a ‘new legal form for associations’ (out of the 38 respondents who defined
themselves under the legal form of association, 42% (16 out of 38) favoured the creation of ‘A
new legal form for associations’198
, 32% respondents (12 out of 38) chose the “Harmonisation
of some common minimum standards”199
and 18% respondents (seven out of 38) showed
support for an “EU information campaign”.200
7 HOW DO THE OPTIONS COMPARE?
Based on the assessment of Section 6, the following table provides a comprehensive and
consistent overview on how the impacts of each policy option compare in detail relative to the
baseline:
197
Figures for both scenario’s A and B based on a policy uptake range between 85% and 95%. This range
corresponds to a central estimate 90% uptake of the policy intervention as suggested by the IA study based on
targeted survey and in-depth interviews, as well as legal analysis.
198
Option 1 in the Public Consultation questionnaire.
199
Option 2 in the Public Consultation questionnaire.
200
Option 3 in the Public Consultation questionnaire.
72
Table 13 Comparison of the impacts of each policy option relative to the baseline.
Main impacts on: PO 1201: ‘the European
Association’ (PO 1a)” or
‘The European cross-
border Association’
(PO1b)
PO 2: Harmonisation
regarding common
minimum standards for
cross-border activities of
associations
PO 3: Creation of an
additional national legal
form of association designed
for a cross-border
membership and/or cross-
border purposes or activities
i. i. Associations active
cross border
Need to set up new legal
form (administrative
procedure and cost).
No need to change statutes or
legal form. Adaptation based
on familiarisation of new
rules, as transposed by the
relevant MS.
Need to set up new legal form
(administrative procedure and
cost).
Automatic recognition in
all MS (freedom of
establishment and mobility
in the single market).
Mutual recognition for
associations to enjoy freedom
of establishment and mobility
in the single market.
Mutual recognition for
associations to enjoy freedom
of establishment and mobility
in the single market.
After setting up a new legal
form, substantial
simplification in terms of
compliance cost and
administrative burden for
cross border activities.
Substantial simplification in
terms of compliance cost and
administrative burden for the
running cost of operating
cross border, depending on
the extent of harmonisation
and the transposition.
After setting up a new legal
form at national level,
substantial simplification in
terms of compliance cost and
administrative burden for
cross border activities.
International and large
associations with presence
in several Member States
and an explicit European
character (PO1a) and
associations with targeted
cross-border needs and
ambitions (PO1b).
Associations with only
occasional cross-border
needs or with interaction with
only a limited number of
Member States.
International and large
associations with presence in
several Member States and an
explicit European character,
and associations with targeted
cross-border needs and
ambitions.
Legal certainty about
freedom of establishment
and full mobility across
Member States when
converting into a ‘European
association’.
Advantageous for small
associations or those aiming
to occasionally work across
borders as these would incur
otherwise a relatively high
one-time cost from setting up
a new legal form through
conversion.
Legal certainty about freedom
of establishment and full
mobility across Member
States when converting into
the new legal form.
ii.ii. Associations
interested in
launching cross
border operations,
but hesitating due to
existing barriers
Same as above Same as above Same as above
201
PO1 captures both the sub-options PO1a and PO1b.
73
iii.iii. Associations not
interested in
launching cross
border operations
Not affected (as they are
not obliged to convert).
Effects may occur depending
on the transposition (e.g.
should a MS wishes to update
its rules on a given element
overall). In case the
requirements change because
of the new harmonised rules
– then the existing
associations would also need
to adapt.
Not affected (as they are not
obliged to convert).
Member States Need to introduce a new
legal form fully or partially
regulated by EU law and
allow for registration and
monitoring of such a form.
Need to adapt their current
national laws on associations
to new harmonised
requirements, for (all)
associations.
Need to introduce a new legal
form within the national legal
framework partially regulated
by EU law and allow for
registration and monitoring of
such a form.
Short-term cost increase,
adaptation of current
registers to common
standards and possible
reduction of revenues from
registrations.
Long-term costs reduction
thanks to automatic
recognition of new legal
form and online registration
(digital registers).
Information cost about
changes in the legislation and
subsequent compliance (in
terms of monitoring and
supervision).
Short-term cost increase,
adaptation of current registers
to common standards.
Short-term cost increase,
adaptation of current registers
to common standards and
possible reduction of revenues
from registrations.
Long-term costs reduction
thanks to recognition of new
legal form and online
registration (digital registers).
Citizens EU citizens would have the possibility to establish associations facilitating transnational
activities (including cross-border provision of services, cross-border collaboration among
associations from different MSs, tackling shared challenges across Member States and EU
regions etc.)
EU citizens would enjoy improved access and offer, thanks to potential new service
providers from other Member States, especially in sectors where associations are most
present (e.g. social and health services).
Other entities which
are active in the
same
sectors/markets will
be impacted,
Other market actors active in the same sectors and markets as non-profit providers such as
associations will experience greater competition (given that would more easily offer their
services in the single market Member States). All policy options are expected to generate
a positive impact in intensifying competition and price quality of services and goods
(taking into account the differences in effectiveness, as described for each policy option in
this Section below).
Improved public procurement market at EU level, given that all policy options would allow
associations to compete more easily for contracts tendered by public institutions also in
other Member States (particularly in specific sectors such as care, health and social
services, employment services and social work, where in recent decades a large increase
of (cross-border operating) for-profit providers has been observed).
ASSOCIATIONS: ESTIMATES OF MAXIMUM POTENTIAL EXCESS COST REDUCTIONS PER YEAR
PO1 (a) and (b) PO2 PO3
Operating costs
(recurrent)
EUR 770 million EUR 465 million EUR 770 million
74
Compliance cost
(internal)
EUR 190 million EUR 115 million EUR 190 million
Information cost
(internal)
EUR 350 million EUR 210 million EUR 350 million
Direct cost/External
advisory cost
(External running
cost)
EUR 230 million EUR 140 million EUR 230 million
ASSOCIATIONS: ESTIMATES OF MAXIMUM POTENTIAL EXCESS COST REDUCTIONS OVER 15 YEARS202
Operating costs
(recurrent)
EUR 8.5 billion EUR 5.1 billion EUR 8.5 billion
ASSOCIATIONS: ESTIMATES OF MAXIMUM POTENTIAL EXCESS COST REDUCTIONS PER OPERATION LAUNCH
PO1 (PO1a & PO1b) PO2 PO3
Launching launch
costs203
(one-off):
EUR 2 150 EUR 1 850 EUR 2 150
Internal setup cost
(compliance cost)
EUR 1 500 EUR 1 200 EUR 1 500
External advisory cost
(direct cost)
EUR 650 EUR 650 EUR 650
ASSOCIATIONS: ESTIMATED OF MAXIMUM POTENTIAL EXCESS COST REDUCTIONS PER OPERATION
LAUNCH204 OVER 15 YEARS
PO1 (PO1a & PO1b) PO2 PO3
Launching costs (one-
off) – Scenario A
EUR 278 million
EUR 318 million
EUR 240 million
EUR 274 million
EUR 338 million
EUR 378 million
Launching costs (one-
off) – Scenario B
EUR 233 million
EUR 267 million
EUR 201 million
EUR 229 million
EUR 283 million
EUR 317 million
The assessed policy options are compared below in both qualitative and quantitative ways for:
effectiveness in reaching the objectives stated in Section 4; benefit-cost ratio and cost-
efficiency; proportionality, including feasibility and subsidiarity; and coherence with other EU
policy objectives and with other policy objectives, such as the SDGs (see Section 1).
Scores are allocated based on an internal assessment, building on Section 6, as well as available
sources – in particular the IA study and the stakeholder consultation.
202
Figures represent the total excess cost reductions over 15 years. Calculations of totals over 15 years take
account of potential lag effects as it is not likely to expect such full excess cost reduction materialise from year
one. A lag effect of one year is assumed where no effects can be observed, due to the time to effectively implement
the appropriate policy intervention and produce the desired effects on relevant stakeholders (e.g. delay of uptake
that can be expected due to the transposition timeframe of the Directive). Therefore, starting from year one, we
can expect a linear increase from the current situation to the full cost reduction potential (i.e. EUR 770 million for
PO1 and PO3 and EUR 465 million per year for PO2) until year five. As of year five, we can expect the policy
intervention to be fully effective and to produce the maximum expected results.
203
Nominally, the current excessive levels of inflation and predictions on inflation development are expected to
cost increases. The cost expressed should thus be interpreted in real term cost at 2023 price levels.
204
Applying this cost estimate to the number of new associations that are expected to launch cross-border
operations under this policy option (see below).
75
Legend: 0 no / neutral impact; + minor positive impact; ++ positive impact; +++ significant positive
impact; - minor negative impact; -- negative impact; --- significant negative impact.
Table 14: Comparison of PO1(a and b), PO2, and PO3.
PO 1a PO 1b PO 2 PO 3
1. Effectiveness (in achieving the objective) +++ +++ ++ ++
Specific Objective 1: Improve possibilities for an
association to have its legal personality recognized in
other Member States, thereby ensuring equal
treatment in the single market
+++ +++ ++ ++
Specific Objective 2: Reduce the regulatory
formalities for associations operating in more than
one Member State
+++ +++ ++ ++
2. Efficiency (cost/benefit ratio)205
+++ +++ ++ +++
3. Coherence +++ +++ +++ +++
4. Proportionality 0 ++ ++ +++
5. Subsidiarity 0 + +++ +++
TOTAL SCORE ++ ++ ++ +++
Effectiveness (in reaching the objectives). All policy options will contribute to achieving the
policy objectives of the initiative, albeit in different manner and extent. Therefore, all received
a reasonably high score. A legislative instrument to remove identified barriers for associations
operating cross-border in the single market – whether through the creation of a new legal form
(both PO1 sub-options and PO3) or harmonisation of common minimum standards (PO2) –
will reduce the existing regulatory barriers and will improve possibilities for an association to
have its legal personality recognized in other Member States. PO1 scores highest and has a
significant positive impact, compared to the positive impact of PO2, for the following reasons.
Regarding Specific Objective 1 (SO1), PO1 scores the highest, as it is based on automatic
recognition of the new legal form applied in a uniform manner (regulation). For the same
reason, being a fully or partially prescribed supranational legal form, both sub-options of PO1
have the most immediate harmonisation effect in the single market linked with the choice of
205
For the efficiency (cost/benefit ratio) in table 14, PO1 and PO3 score equally high (+++) as the excess cost
reductions for cross-border operations over a 15-year time span are equal for PO1 and PO3 (EUR 8,5 billion ) ,
compared to EUR 5,5 billion for PO2. There is a difference between PO1 and PO3 as concerns the launch costs,
however it is of a considerably smaller size . Consequently, in the sum of total excess cost reductions for PO1 and
PO3 that difference is non-significant. Therefore both policy options have an equal score in terms of efficiency
(cost/ benefit ratio) of +++ versus ++ for PO2, for which cost reductions in both operational and launch costs are
significantly smaller.
76
the legal instrument (regulation) and therefore score the highest regarding the specific objective
2 (SO 2).
Efficiency (cost/benefit ratio). All policy options will have a considerable positive impact in
terms of cost efficiency for associations and for competent authorities in the Member States.
Differences between the options in terms of cost reduction depend, to a certain extent, on the
cross-border ambitions and current/future activities of associations. Also the uptake of the
policy option is a factor that will greatly decide upon this cost/benefit ratio. These are to certain
extent uncertain factors that can only be indirectly influenced by the legal framework that the
policy options aim to improve and thus depends inevitably on a series of assumptions made in
this IA (as outlined in Annex 4).
As presented in Section 6, it is estimated that all policy options will have a positive effect, as
all are expected to lower considerably excess costs and administrative burden for associations
(biggest relative impact through the creation of an EU legal form as well as an additional legal
form at Member State level), and neither is imposing new costs on relevant stakeholders.
From the point of view of expected overall excess cost reduction of associations’ operating
cost, PO1 and PO3 emerge as the most effective. The uncertainty of this potential of PO1 in
terms of take up is however higher than for PO3, certainly for smaller associations. On the
other hand, the implementation of PO3 at national level may generate unforeseen differences
and complexities, likely reducing the full potential. Over a 15-year time span a reduction of
excess costs up to 770 million per year for PO1 and PO3 and 465 million per year for PO2
is estimated. For the assessed timeframe of 15 years that potentially results in a total excess
cost reduction of up to EUR 8.5 billion under PO1 and PO3 versus up to EUR 5.1 billion
under PO2206
.
From the point of view of cost of launching cross border operations, while overarching
effects are similar for various options, the underlying drivers and affected stakeholder groups
differ. Both sub-options of PO1 are particularly relevant to large associations willing to operate
cross border (e.g. International NPOs). They provide an option for those looking for an
international legal form and allow for managing centrally by using economies of scale at
European level. PO2, on the other hand, provides a lowering of the barrier to entry without a
need for active choice to advance ones’ own position for an association. This facilitates ad hoc
cross-border operations and can be more beneficial for micro and small associations, as PO2
provides a reduction of the barrier without a need for action by the associations interested (no
need to convert into a new legal form). In monetary terms, the excess cost reduction for the
best estimate scenario over a timeframe of 15 years of PO3 is largest and is estimated to range
between EUR 338 million and EUR 378 million, followed by PO1 (EUR 278 million - EUR
206
Figures represent the total excess cost reductions over 15 years. See table 9 for PO1 10 for PO2 and11 for PO3
in Section 6 for sub costs. Calculations of totals over 15 years take account of potential lag effects as it is not
likely to expect such full excess cost reductions materialise from year one. A lag effect of one year is assumed
where no effects can be observed, due to the time to effectively implement the appropriate policy intervention and
produce the desired effects on relevant stakeholders (e.g. delay of uptake that can be expected due to the
transposition timeframe of the Directive). Therefore, starting from year one, we can expect a linear increase from
the current situation to the full cost reduction potential (i.e. EUR 770 million for PO1 and PO3 and EUR 465
million per year for PO2) until year five. As of year five, it can be expected that the policy intervention is fully
effective and produces the maximum expected results.
77
318 million) and PO2 with the lowest expected reduction (EUR 240 million - EUR 274
million).
In table 13 an overview of the effects on excess cost reductions is displayed, being clear that
all policy options have a considerable positive effect on the two main types of costs: operational
costs and launch costs, of which operational costs are a larger part. When considering both cost
option accumulatively, the estimates show that PO1 and PO3 are equally favourable, followed
by PO2 (minor difference occur because of the launch costs as described above). Their target
groups differ however. Given that PO3 is expected to be more inclusive for smaller associations
because of its likely relative substantive familiarity vis-à-vis that of PO1, the actual expected
excess cost reductions (emerging by new associations to launch cross-border activities) are
expected for a 15-year time span to be higher than for PO1(more registrations of small
associations compared to fewer registrations of large associations). See table 12 of this Section
for a detailed comparison of excess cost reductions for scenario A and scenario B. As argued
before, PO1b has a more proportionate character than PO1a, but still remains an EU legal form.
However, the extent of “inclusiveness” to which these benefits will trickle down to smaller
associations will depend on the complexity and cost of converting into such a legal form, or
for newly established associations the extent to which this is more complex than using national
legal forms. Hence, in summary, one might assume that PO1b is not as inclusive as PO3 and,
due to lack of further specific evidence that would point otherwise, the IA assumes similarity
in the uptake potential between PO1a and PO1b. Consequently, the long-term estimated
impacts of PO1b are not likely to differ from PO1a.
Finally, PO3 and PO1 will reduce operations costs mostly for associations operating in more
than one Member State. PO3 has the specific advantage to stimulate the associations operating
across borders by offering them a vehicle vested with reduced administrative burden and costs,
while also be mostly adapted to the national context and traditions related to associations. At
the same time, it should be noted that for both PO1 and PO3 benefiting would entail that
existing associations would need to change their statutes and re-register, if relevant, to meet
the requirements of the new legal form or create a new association under the new legal form.
This would generate one-off costs and administrative burden.
Coherence. Issues with coherence were not detected and therefore all policy options scored
well and equally so. Improving the functioning of the single market is a priority for the EU,
which this initiative contributes to. Further, improving the possibilities for associations to
operate cross-border contributes to the functioning of civil society and thereby, indirectly, to
upholding an enabling civic space. All policy options would support a fair transition for all,
given the sectors in which associations are most present. Finally, all policy options are aligned
with the Social Economy Action Plan and with the other measures mentioned therein, including
the proposal for a Council Recommendation on developing social economy framework
conditions and Commission Staff Working Documents providing factual information on
relevant taxation frameworks for social economy entities and on the existing case-law on non-
discriminatory taxation of charitable organisations and their donors.
All three policy options facilitate exercising the freedom of assembly and of association, as
defined in the Charter, the Universal Declaration of Human Rights and the European
Convention on Human Rights. Further, measures encouraging intensified cross-border
78
activities of associations directly support the work of the Council of Europe, and in particular
the European Convention on the Recognition of the Legal Personality of International Non-
Governmental Organisations, the Recommendation to its Member States on the legal status of
non-governmental organisations in Europe, and the Fundamental Principles on the Status of
Non-governmental Organizations in Europe.
All policy options support SDG 8 on Decent work and Economic Growth and, indirectly, SDG
16 on Peace, Justice, and Strong Institutions as well as indirectly SDG 3 on healthy lives and
promote well-being for all, by facilitating cross-border activities of associations mainly active
in sectors such as health, care and social services.
Proportionality. In terms of proportionality, PO3 (establishment of an additional legal form at
Member State level) scores highest. This policy option is most targeted at associations who
wish to operate cross-border and would not necessarily lead Member States to change their
existing association law nor would it have direct implications on associations not interested in
cross-border activities (as in PO2), in proportion with the scale of the identified problem (8%
of all associations in the EU are estimated as currently engaged in cross-border activities). This
is also in contrast to PO1a, which would regulate matters beyond what would be essential to
facilitate cross-border activities, but also to PO2, which would harmonise common standards
for cross-border activities and mobility of all associations, thereby resulting in partial
amendment of existing rules on associations in all Member States. Regarding PO1b, which
would also create a legal form focusing on cross-border aspects at EU level, it would be slightly
less proportionate than PO3, given that it would be applied in a uniform manner (i.e. choice
of the legal instrument), which does not allow Member States to adapt the legal form to their
national specificities (i.e. through transposition) and therefore may be considered as non-
proportionate in relation to the scale and nature of the identified problem in Section 2.
A new legal form for cross-border associations at Member State level (PO3) would allow for
flexibility for Member States to adapt it to their respective settings, vis-à-vis an EU-level legal
form applied in a uniform manner envisaged in both sub-options of PO1. Moreover, PO3 would
not require changing Member States legislation for all associations, as it would be the case for
PO2. Therefore, PO3 scores highest on proportionality.
Subsidiarity. In terms of subsidiarity, all policy options answer to the same key problem drivers
which have been described above and therefore the necessity of an EU action is covered by all
policy options as well as the fact that a solution can be better achieved at Union level (for more
explanation, see section 3.1). Furthermore, a Union action would prevent the regulatory
fragmentation that currently exists in the EU and only such an action would enable the adoption
of common or mutually recognised rules that would ease the cross-border activities and
mobility of associations (for more explanation, see section 3.2). However, PO2 and PO3
arguably respect the principle of subsidiarity better than either sub-option of PO1, given that
the proposed legal instrument of PO2 and PO3, i.e. a directive, allows Member States flexibility
in transposing the requirements set, and therefore score the highest in that regard.
8 PREFERRED OPTION
Overall, all policy options score rather positively as outlined in Sections 6 and 7, as they do not
impose significant costs for Member Stares, while rather reducing excess costs for associations,
79
albeit to a differing extent. This is particularly the case for options PO1 and PO3, which do not
impose costs on all associations, as the choice of taking-up the new legal form will be
voluntary. Associations that would choose to convert to or merge with the new form would
encounter those administrative costs as assessed in Section 6. Furthermore, costs on authorities
are not significant in any policy option, as the objective is regulatory and administrative
simplification. PO1 relies on a regulation, while PO2 and PO3 rely on directives.
Although both a directive and a regulation allow for achieving the policy objectives (as outlined
in Section 4) in an efficient manner, on balance, a regulation can be seen as more effective and
efficient in terms of enforcement and possible divergent interpretation leading to
fragmentation. This is due to its direct applicability and uniformity in content. Using a directive
may entail risks in transposition, including gold-plating. However, the comparison is not
entirely clear-cut. Transposition allows for adapting the prescribed rules to national settings,
which may also facilitate uptake and reduce adjustment costs, given the general lack of
resources associations are facing. The risk of fragmentation and divergent interpretation among
the Member States may be mitigated and legal clarity may be promoted through the overall
level of precision of the proposed instrument.
The main differences between the three options concern their level of compliance with the
proportionality and subsidiarity principles and their political and legal feasibility in relation to
the nature of the identified problem. In light of the foregoing and considering the absence of a
sharp difference in terms of efficiency (costs/benefits) between the options, the preferred option
appears to be PO3, as described below.
Firstly, PO3 is most suitable in addressing the objectives, when taking into account
proportionality. This also takes into account the scale of the identified problem (estimated
numbers of associations currently active cross-border and with potential). PO3 allows those
associations interested in operating in more than one Member State to benefit from recognition
of their legal personality across the Union, as well as to have improved clarity on administrative
procedures applying when operating cross-border, including providing goods and services,
receiving capital, welcoming members, merging with associations cross-border207
and
converting cross-border.
Although they score similarly overall for effectiveness, a substantive advantage of PO3
compared to PO2 concerns the recognition of legal personality. The legal personality of
associations under the new legal form would be recognized in other Member States, while
national associations under PO2 would only benefit from a standardized procedure for
obtaining such recognition on a case-by-case basis. Applying the ‘once only’ principle leads to
a minimal number of registrations, hence PO3 is more advantageous over time for existing
associations, also smaller ones, despite the higher one-off cost stemming from converting to
the new legal form. Both sub-options of PO1 score slightly higher for effectiveness, for the
reasons described in Section 7.
207
DG GROW has commissioned an ongoing independent study to describe and compare the 27 national legal
regimes for non-profit associations in the EU concerning their legislative approach to mergers and demergers.
Results are expected in Q2 2023 in order to feed into the preparation of the initiative.
80
Thirdly, PO3 does not interfere with national regimes for associations and traditions in the
Member States and furthermore allows for them to be duly considered. This also applies to
Member States with existing provisions concerning cross-border aspects of associations, given
that the said provisions concern existing legal forms. It would rather require adjustment from
Member States to incorporate the new legal form in national legislation, and adaptations to
ensure mutual recognition of the legal personality, including adaptations to the existing national
registries for associations. As there is very little harmonisation in the Union concerning
association law and there is a history of an unsuccessful attempt to create a European
Association at EU level, the need for proportionality is underscored. PO1b, which would also
create a legal form focusing on cross-border aspects, would likely be less proportionate, given
the notion of subsidiarity and that it does not allow Member States to adapt the legal form to
their national specificities through transposition. Its impact in terms of legal clarity is therefore
not clear. Precedents show that this technique adds complexity for those using such legal form,
thereby having a negative effect on uptake.208
PO3 is therefore targeted and complies the most with the proportionality and subsidiarity
principles. All aspects considered, PO3 meets best the objectives of addressing the identified
problem and meeting the objective of improving the functioning of the single market for
associations, thereby also promoting EU civil society and strengthening economic
development in the EU.
Application of the ‘One In, One Out’ Approach
Given the voluntary nature of the preferred option establishing an additional new legal form
specifically designed for a cross-border membership and/or for cross-border activities and/or
purposes (‘cross-order assocations’), no costs would be imposed on existing associations.
Associations could however incur direct adjustment costs should they desire to convert to this
new legal form, thereby enjoying the potential of reduced costs. (see Annex 3 and 4).
Table 15: Excessive costs reduction related to the ‘One In One Out’ (OIOO) assessment.
Associations: one-off
launching costs209
Excessive cost
reduction 210
(relative
to baseline)
Associations: recurrent yearly
administrative and compliance
cost reduction.
Excessive cost
reduction 211
(relative to
baseline)
Staff cost: time spent to
familiarise with new
~ EUR 1 500 Compliance cost (internal): ~ EUR 190
million
208
Stakeholder consultation in the context of the European Cooperative Society, see Report on the application of
Regulation No 1435/2003 on the Statute for a European Cooperative Society (SCE) of 23.2.2012.
209
According to insights collected from stakeholders consulted, in the best scenario with policy intervention setup
costs can be expected to be reduced by up to 25% (external services) and 50% (internal costs).
210
Excessive cost are defined as the unnecessary cost which could be avoided by solving the identified problem
(as outlined in Section 2). These need to be distinguished from the actual cost which include also the unavoidable
component of the cost category.
211
Idem.
81
legislation, check and prepare
admin formalities)
Other setup costs: external
services: advisory on labour,
accounting and tax laws in
countries where associations
wish to expand + registration
costs
~ EUR 650 Information cost (internal): ~ EUR 350
million
Total per launch ~ EUR 2 150 Direct cost/External advisory
cost (External running cost):
~ EUR 230
million
Total one-off excess cost
reductions (new associations
that are expected to launch
cross border operations under
this policy option) – 15 years
Scenario A: EUR 338
million – EUR 375
million212
Scenario B: EUR 283
million - EUR 317
million
Total recurrent excess cost
reductions
~ EUR 770
million (1 year)
EUR 8.5 billion
(15 years)
9 HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED?
As with any new regulatory initiative, if the preferred option is implemented, there will be
periodic evaluation and monitoring. Monitoring could be undertaken by the Commission in
conjunction with the EU and national authorities, and the non-profit sector, i.e. representatives
of associations and clients or members of associations to get feedback regarding how well (or
otherwise) associations are operating across borders and are making the most of the single
market opportunities and freedoms. The importance of regular feedback loops between the
Commission and key stakeholders (e.g. associations, other actors of the non-profit sector,
Member States authorities) can be highlighted. This would provide an opportunity to learn
about the impact of the new regulatory initiative on associations operating cross-border in the
single market, including advantages, drawbacks and any practical implementation challenges
for Member States and associations. This would also allow for further data gathering in order
to capture the size and economic value of associations operating cross-border in the single
market (e.g. an independent study on the economic performance of the Proximity and Social
Economy industrial ecosystem, including associations, has been Commissioned by the
Commission under the Single Market Programme. Its first results are expected in 2024 and will
feed the future monitoring of the initiative).
There should be an EU legislative intervention, an evaluation will be carried out by 5 years
since its entry into force or its transposition by Member States (depending on the nature of the
chosen instrument) in order to allow for sufficient period for awareness raising of potential
beneficiary associations, and such an evaluation will gather evidence to assess how this specific
intervention has performed.
212
With a central value for this range of EUR 358 million.
82
Table 16: Objectives
and Indicators.
Objectives
Indicators Sources of information
Reduce the regulatory
formalities for associations
operating in more than one
Member State
Compliance level by Member States
(i.e. transposition pace, infringement
cases).
excess cost reductions for associations
realised due to reduced regulatory
formalities.
Number and geographic spread of
registered cross-border associations)
Evaluation/ desk research
/consultation of stakeholders and
authorities
(Online) registries in MS (with
aggregated information at EU level
Information collected through
surveys
Improve possibilities for
an association to have its
legal personality
recognized in other
Member States, thereby
ensuring equal treatment
in the single market
Perceived satisfaction of associations
operating cross-border
Evaluation / desk research /
consultation of stakeholders and
authorities
83
LIST OF ANNEXES213
Annex 1: Procedural information
Annex 2: Stakeholder consultation (Synopsis report)
Annex 3: Who is affected and how?
Annex 4: Analytical methods
Annex 5: Competitiveness check
Annex 6: Description of market context
Annex 7: SME test
Annex 8: Associations operating or wishing to operate cross border in the single market –
territorial dimension
Annex 9: Relationships of the initiative on cross- border activities of associations with 1) legal
forms in Social Economy 2) related initiatives on Social Economy and Democracy, 3)
Commission proposals setting a European Association
Annex 10: Legal regimes of associations in EU Member States
Annex 11: National legislation rules on cross-border aspects of associations
Annex 12: Notion on Public Benefit status
Annex 13: Discarded policy options at an early stage
Annex 14: List of Figures, Tables, and Boxes
213
Annexes are not included in this document but provided separately.